AT&T CEO Praises Tax Cuts but Says Tariff Uncertainty Remains
AT&T expects to see up to $8 billion in tax savings for 2025-2027 as a result of the recently enacted reconciliation package and will invest $3.5 billion of those savings in its network, the carrier said Wednesday as it reported Q2 results. AT&T also reported 401,000 postpaid phone net adds for the quarter, 243,000 AT&T Fiber net adds and 203,000 AT&T Internet Air adds.
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During a call with analysts on Wednesday, CEO John Stankey praised the Trump administration for its regulatory policies, while also conceding cuts to the federal workforce, immigration policies and tariffs are raising questions. Stankey has been among the most publicly pro-Trump executives in the telecom sector (see 2412100069).
Thanks to the tax changes, “we intend to invest more rapidly in next-generation networks,” Stankey said, with the additional capital spending providing fiber to an additional 4 million locations per year. “This will support good-paying middle-class jobs all right here in the U.S.,” Stankey said.
The reconciliation package “also creates a pipeline of mid-band spectrum that will help meet soaring consumer demand and keep the U.S. technologically competitive with other countries,” Stankey said. AT&T will be disciplined in its spending, but “if something pops up, we have the opportunity within our capital structure today to go and take advantage of that,” he said. “Spectrum is a lifeblood of our wireless business” and “we've always invested in it strategically,” he said.
AT&T is seeing challenges from cuts to the federal government and federal spending, Stankey said. “We also told you at the beginning of the year, we expected some of that to happen and that we felt like we could manage through that,” he said. Immigration policies appear to be affecting overall subscriber adds, he said. “Again, we told you that there was going to be an impact,” he said.
Stankey also mentioned Trump tariffs. What happens to the larger economy is going to affect AT&T, he said. “I would really like to see some of the uncertainty around tariffs start to dissipate,” he said.
With the FCC set to vote Thursday on an NPRM on speeding copper retirements (see 2507220065), Stankey said AT&T filed with the FCC to discontinue service across in about 10% of its wire centers in 17 states. “This is a key step towards our target of discontinuing service across the large majority of our copper footprint by the end of 2029,” he said. Stankey questioned whether analysts have been positive enough in their commentary on deregulatory moves under President Donald Trump.
Among other results, AT&T reported operating income of $6.5 billion and net income of $4.9 billion on revenues of $30.8 billion. The carrier had $4.9 billion in capital spending with $45 billion in free cash flow. Postpaid phone churn was .87%.
Morningstar Investor’s Michael Hodel saw most of the results as positive. “Management acknowledged that the cost to attract and retain wireless customers has increased and expressed hope that competitive activity will dissipate over the rest of the year, echoing rival Verizon’s comments earlier this week,” he said. “AT&T’s ability to earn excess returns on capital depends largely on rational competition. We believe the structure of the US wireless industry enforces long-term competitive discipline.”