AT&T’s Stephenson weighs in on Huawei situation

AT&T Randall Stephenson
The Communications Workers of America has slammed AT&T for its massive share buybacks, saying the company is caving to the demands of Elliott, which is resulting in layoffs. (FierceWireless)

U.S. Attorney General William Barr said yesterday the U.S. should be “actively considering” investments into Nokia or Ericsson to compete against Huawei in developing 5G technologies. 

“It’s all very well to tell our friends and allies that they shouldn’t install Huawei, but whose infrastructure are they going to install?” asked Barr, according to Bloomberg. “There are only two companies that can compete with Huawei right now: Nokia and Ericsson.”

But AT&T’s CEO Randall Stephenson, speaking on CNBC this morning, said, “Governments taking positions in private companies to develop private solutions – I just don’t think it’s a good idea.”

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But Stephenson added that he does like some ideas that have come out of the White House recently. He could have been referring to news this week that AT&T, Dell, and Microsoft are working with the White House to develop software-based 5G alternatives to Huawei, as the Wall Street Journal reported Tuesday. Or perhaps he was referring to a bipartisan group of U.S. Senators introducing legislation to support software such as O-RAN as a Western-based alternative to equipment from Huawei and ZTE.  

RELATED: Britain hedges on Huawei, US senators suggest O-RAN as option

This morning, Stephenson took the opportunity to tout AT&T’s leadership in software-defined networking. He said AT&T has been leading the charge in developing software-defined architectures for its networks, and that the company is using hardware that “would have been considered unconventional five years ago” because the hardware is generic and can run any software.

“To the extent we do that, we innovate our way out of this competitive quagmire where everybody is talking about Huawei,” said Stephenson. “Use innovation, use software to win rather than government mandates to win.”

Elliott

Asked about AT&T’s troubles last year with Elliott Management, Stephenson said, “It was an intense period when they sent the letter.” But he spun it as all good. “We happen to agree with the areas that they thought the opportunities for AT&T were: capital allocation, margin expansion…. We were way down the path of executing a lot of this. We spent a lot of time together talking about some of these ideas and actually came I thought of a mutual mind.”

RELATED: Elliott trashes AT&T management and its execution in wireless

He said Elliott wanted more transparency on capital allocations, and “I probably, candidly, wouldn’t have commented in detail on our capital allocation plan…share buybacks, particularly.”

AT&T bought back 56 million shares last year, and Stephenson said the company will buy back about 100 million shares in the first quarter 2020.

The Communications Workers of America (CWA) has slammed AT&T for these massive share buybacks, saying the company is caving to the demands of Elliott, which is resulting in layoffs.

“AT&T’s CEO Randall Stephenson pledged to create 7,000 new jobs if President Trump’s corporate tax cuts passed,” wrote the CWA in late January. “Instead, the company is cutting jobs and outsourcing work, including relying on lower wage subcontractors to build its 5G network. Meanwhile, AT&T has continued to cater to the demands of controversial vulture hedge fund Elliott Management.”

The CWA said the company has cut 37,818 jobs since the Tax Cuts and Jobs Act went into effect in 2018, including 4,040 in the fourth quarter of 2019. “AT&T earnings report shows that AT&T continues to cut jobs and reduce capital expenditures even as the company announced record operating and free cash flow for 2019 and more than $5 billion in stock buybacks in the past four months,” wrote CWA. "Elliott has also won a commitment from AT&T to spend $30 billion on stock buybacks, which will drive up its share price to enrich a small group of wealthy investors."

But perhaps the Elliott pressure will subside a bit on AT&T. Yesterday, Elliott revealed it has built a "substantial" stake in SoftBank, the firm run by Japanese billionaire Masa Son. Elliott is in talks with SoftBank to make changes to improve performance of the company, reports CNN.

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