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AT&T CEO felt 'degree of optimism' after Trump meeting


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AT&T CEO felt 'degree of optimism' after Trump meeting

AT&T Inc. CEO Randall Stephenson said Jan. 25 that his recent meeting with President Donald Trump left him with several reasons for optimism.

Speaking during a Jan. 25 earnings conference call, Stephenson said that when he met with Trump on Jan. 12, it was "obvious" he was meeting with a fellow CEO. Stephenson noted that Trump was keenly focused on tax reform and regulatory reform.

After the meeting, Stephenson said he felt "a degree of optimism" that Trump could actually achieve tax reform this year, though it remains unclear exactly how the tax code might be changed. Prior to the election, Trump called for corporate taxes to be lowered to 15%, down from the current stated rate of 35%. By comparison, House Republicans, led by House Speaker Paul Ryan, R-Wis., have pushed a plan that would lower the corporate tax rate to 20%.

Stephenson said that whatever the figure ultimately is, he believes a lower corporate tax rate is "more than possible" at this point and is "likely." He also said it would have a stimulative effect and would lead AT&T to step up its investment levels.

Stephenson did not address Trump's position on AT&T's pending acquisition of Time Warner Inc. Trump previously said he opposed the deal, arguing that it would concentrate too much power in the hands of too few.

For the fourth quarter of 2016, AT&T's consolidated revenues totaled $41.8 billion, down from $42.1 billion in the year-earlier period. For the full year, consolidated revenues totaled $163.8 billion, up 11.6% for the year, driven by a full year of results from DIRECTV and gains in IP services and video.

Looking at the pay TV business, the company ended the period with approximately 25.3 million video connections, compared to 25.4 million a year ago. During the fourth quarter of 2016, the company added 235,000 DIRECTV satellite subscribers but AT&T U-verse subscribers declined by 262,000. Neither figure includes subscribers from the DIRECTV Now streaming offering, which counted more than 200,000 paid net adds in the first month after its Nov. 30, 2016, launch.

On the mobile side, AT&T had approximately 53.5 million consumer mobility subscribers as of the end of 2016 compared to 55.0 million at the end of 2015. During the fourth quarter of 2016, AT&T counted branded net adds of 676,000, comprised of 406,000 prepaid net adds and 270,000 postpaid net adds. Total churn among consumer mobility subscribers in the quarter was 2.43% versus 1.97% in the year-ago period.

Overall, the company reported fourth-quarter 2016 net income attributable to AT&T of $2.4 billion, or 39 cents per share, compared to $4.0 billion, or 65 cents per share, in the prior-year period. Adjusting for a noncash actuarial loss on benefit plans and other one-time costs, EPS totaled 66 cents, compared to an adjusted EPS of 63 cents in the year-ago quarter.

The S&P Capital IQ consensus EPS estimate for fourth quarter 2016 was 66 cents on a normalized basis and 55 cents on a GAAP basis.

For the full year, attributable net income totaled $13.0 billion, or $2.10 per share, down from $13.3 billion, or $2.37 per share, in 2015. With adjustments for both years, EPS totaled $2.84 for 2016, compared with $2.71 a year earlier.

For full year 2016, the S&P Capital IQ consensus EPS estimate was $2.84 on a normalized basis and $2.30 on a GAAP basis.

Looking ahead to 2017, the company expects consolidated revenue growth in the low-single digits and adjusted EPS growth in the midsingle digit range. AT&T CFO John Stephens noted that these projections do not take into account any potential changes to the corporate tax rate or AT&T's pending acquisition of Time Warner.