NEW YORK—Name the topic, AT&T’s chief likes what it sees from the new administration of Donald Trump. If only he knew how the new president will deal with AT&T’s biggest gamble — its $85 billion merger with Time Warner.
AT&T CEO Randall Stephenson told investors Wednesday that after a recent meeting with then President-elect Trump, he was bullish that the topics discussed at length, tax reform and regulatory reform, “could actually be pulled off this year.”
“We know at AT&T that if you saw tax rates move to 20% to 25%, we know what we would do: we would step up our investment levels.”
Stephenson also said he was optimistic that Trump’s choice of Federal Communications Commission Chairman Ajit Pai, would be able “to clear the underbrush of regulation (and) bring some clarity and sone level of predictability to the regulatory environment.”
Pai had opposed net neutrality rules as a commissioner, as did big telecom companies and Internet providers AT&T and Verizon, which had unsuccessfully lobbied against the agency’s moves in a bruising and public fight with content providers like Netflix.
Verizon, AT&T-backed groups want net neutrality review
Stephenson offered his comments on a conference call with analysts after AT&T announced end-of-year and fourth quarter earnings. The media powerhouse reported adjusted fourth-earnings of 66 cents per share, in line with analysts polled by S&P Global Market Intelligence. AT&T’s fourth quarter revenues of $41.8 billion compared to $42.1 billion a year ago, and were slightly below analyst expectations, however.
For the full year, AT&T consolidated revenues totaled $163.8 billion, up 11.6% compared to last year, which AT&T attributed to the performance of DirecTV, which it acquired in 2015, plus gains in IP services and video.
Without factoring in the impact of Time Warner, AT&T is projecting single digit consolidated revenue growth in 2017.
AT&T’s stock was flat in after-hours trading.
Stephenson called 2016 a “transformational” year for the company, as it launched the DirecTV Now “over-the-top” streaming service, pushed towards next-generation 5G wireless, and of course, made the stunning, still-under-scrutiny, October deal to buy Time Warner.
Trump has publicly opposed the merger, though it remains to be seen how far he goes to try and block it. Stephenson said the deal did not come up during his recent meeting with Trump, though he has expressed optimism that the transaction would eventually past muster, a stance AT&T reiterated on Wednesday.
In the closely watched wireless sector of its business, AT&T says it added 2.8 million subscribers in the fourth quarter, 1.3 million of which came from customers in Mexico, where AT&T has been expanding its investments. For the full year, AT&T added 9.5 million wireless customers, of which 3.3 million came from Mexico. The company also said that 1.1 million branded smartphones were added to its subscriber base these past 12 months. And in the fourth quarter, AT&T reported a 0.98% postpaid “churn” rate (a measure of subscribers who bolt for a rival), its best mark ever.
The company added that growth on the business side of wireless, which factors in the company’s efforts in the all-connected IOT (Internet of Things) areas, has also been robust.
But AT&T has been losing subscribers to smaller rivals T-Mobile and Sprint. In the fourth quarter it lost 67,000 of the most valuable “postpaid” wireless subscriber segment.
Since AT&T launched DirecTV Now at the end of November, the company said it has attracted more than 200,000 subscribers to the service. It took AT&T a year-and-a half, by contrast, to reach that many customers with its U-verse TV offering, the company says. Of course, DirecTV Now customers were lured by heavily discounted promotional pricing that has since been lifted, so it will worth watching the subscriber metrics in the coming months.
“Remember when wireless was the good part of the portfolio?,” asks telecom analyst Craig Moffett of MoffettNathanson. “Now, AT&T is diversifying away as fast as they can, and the market is punishing Verizon for not diversifying fast enough.”
Follow USA TODAY Personal Tech Columnist @edbaig in Twitter