AT&T CFO: Potential tax reform under Trump would likely spur more investment

Tax reforms could enable AT&T to invest more heavily in its network, perhaps ramping up its pursuit of 5G technologies and services.

AT&T’s acquisition spending spree may ramp up under the Trump administration, CFO John Stephens suggested Wednesday.

The No. 2 mobile network operator in the U.S. recently launched DirecTV Now in the wake of its $49 billion acquisition of the satellite TV company, and it is hoping to pick up Time Warner for another $85 billion. President-elect Trump earlier vowed to block that deal, but the three FCC advisers he’s named to his transition team thus far appear to signal a willingness to allow more consolidation in telecom, media and other markets.

The incoming administration may also be eager to overhaul U.S. corporate tax policy, Stephens said during an investors conference Wednesday afternoon. And those factors could enable AT&T to increase its investments in multiple ways.

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“When you have tax reform that’s been proposed—and whether it’s the House presentation, or the president-elect’s plan, or some mix of that—we believe that it will lead to further investment in the United States, which means further capital spending, which means further jobs here in the United States, and when you put all that together it means further demand for our products,” Stephens said. “So we are very excited about that. We feel very good about that. It’s still early. We’ll see how things play out, but we are very optimistic.”

AT&T tried to acquire T-Mobile in 2011, before finally giving up after the U.S. Department of Justice filed an antitrust complaint to block the deal. So while most of the M&A buzz in the wireless industry lately has focused on a potential tie-up between Sprint and T-Mobile, AT&T could see an opportunity to make another play for one of the nation’s smaller tier-one carriers in a move that could not only increase its customer base but also could grow its spectrum portfolio.

But Stephens said tax reforms could enable AT&T to invest more heavily in its network, perhaps ramping up its pursuit of 5G technologies and services.

“Yes, we would envision there’s a real opportunity for investment,” he said. “I think (tax reform) would change our balance sheet, impact our deferred taxes, change our cash flows, improve our cash flows, and with that, certainly, we would look to whether we do something earlier, whether we accelerate our 5G development. We’ll still be very prudent with our overall balance sheet and very prudent with our debt levels.”   

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