AT&T CEO: Trump Tariffs Causing Confusion for Companies

“All companies in the U.S. are now operating with less visibility as the administration pursues policies that are intended to facilitate its laudable goal of creating more equitable global trade and improved domestic manufacturing capabilities,” Stankey said: The tariffs “could potentially increase the cost of smartphones and other devices, as well as the cost of network and technical equipment.” The net effect remains to be seen and will depend in part on how much of the costs are passed along to consumers, he said.

AT&T is unlikely to substantially increase handset subsidies to offset higher prices, Stankey said. “Unfortunately for the customer, we're going to have to come up with some new ways for them to figure out how to digest that increase in pricing.” He noted that consumers will also face rising costs for other electronics, including TVs and computers.

Trump told reporters Tuesday at the White House that he plans to lower the 145% tariff on Chinese imports, which has been a key concern of carriers because many smartphones are made in China. The final tariff “won’t be anywhere near that high … but it won’t be zero,” Trump said.

Stankey thanked the FCC for its work helping AT&T make "great progress at retiring our legacy copper network,” adding that "we have an opportunity to move even faster following recent FCC orders.” Commission Chairman Brendan Carr has promised to move aggressively to help companies like AT&T move off legacy networks (see 2504030011).

AT&T is in position to sunset copper lines at about 25% of its wire centers, Stankey said. “We have more applications now pending, and we're actively working with the FCC.”

On postpaid wireless adds, Stankey said AT&T had “a slow January.” But the carrier was able to “fine-tune our offers and competed very well … for the balance of the quarter.” One continuing trend is that in markets where AT&T has fiber, it also competes well on 5G, he said. But Stankey declined to comment on reports that the carrier is negotiating with Lumen on the possible sale of its consumer fiber business to AT&T (see 2503260069).

AT&T reported operating revenues of $29.6 billion, up 2.4% year over year, with operating income of just under $7 billion, up 3.6%. Mobility service revenues were $16.7 billion, up 4.1% year over year. The carrier also reported 261,000 AT&T Fiber net adds and said it now passes 29.5 million consumer and business locations with fiber. “More than 4 out of every 10 AT&T Fiber households now choose AT&T wireless,” the company said. Q1 fiber broadband revenues of $2.1 billion were up 19% over last year.

AT&T also reported 400,000 net adds to its FirstNet program, bringing the number of connections to 7.1 million. The carrier had postpaid phone churn of 0.83%. Prepaid phone net adds were a negative 20,000 with churn of 2.64%.

“On virtually every metric, AT&T outperformed Verizon,” MoffettNathanson’s Craig Moffett told investors. But “this story isn’t over,” he said. “As soon as the first quarter ended, Verizon dramatically raised its promotionality, an obvious nod to the fact that they had been wrong-footed in Q1.” If Verizon’s results “cast doubt on the sustainability of price increases for wireless (lest they trigger subscriber losses), AT&T’s results should provide some welcome comfort.” But the “real driver” of AT&T’s consolidated performance was wireline, Moffett said: “Imagine that.”