If tax reform passes, AT&T (T) CEO Randall Stephenson said the company will spend “at least” $1 billion in capital expenditure and be able to create an estimated 7,000 jobs.
“From my standpoint, the driver of this is the business tax reform… if we get investment going, we get productivity going, we get wage gain going, we invest another billion dollars. Every billion dollars AT&T invests is 7,000 hard hat jobs. These are not entry-level jobs. These are 7,000 jobs of people putting fiber in ground, hard hat jobs that make $70,000 to $80,000 per year,” Stephenson said at an event hosted by The Economic Club of New York on Wednesday.
He described passing tax reform as a “major” and “significant” item for the U.S. economy.
“I cannot overstate how important I think a tax bill that makes the US corporate taxes a competitive regime around the world — that’s big. That’s significant,” he said.
He explained that it would be a “capital-freeing” event for corporate America.
“You are freed up to invest more capital. We have so many initiatives and projects that we would like to invest more in.”
‘We would love to go faster with 5G’
For AT&T, one of those plans is to build out a 5G network, which Stephenson noted would be useful for streaming premium entertainment content with low latency and creating an environment for connected, autonomous cars.
“We would love to go faster with 5G. Going faster means you have to get more fiber in the ground. And so when you look at a tax bill like the House or the Senate bill, either one, they have major incentives for capital investment. We would take full advantage of those incentives to accelerate a lot of the investment we are doing. A billion dollars is an easy number to commit to.”
He added that he’s “quite confident” that other companies will do the same thing when it comes to making these sorts of investments.
“We are in a global economy now, and capital flows freely. It’s like water, it goes to the point of least resistance. There are a lot of places around the world where it’s more beneficial and economic to invest versus the United States with the highest tax rate in the developed world. Suddenly, you bring that tax rate down to a competitive level you are just inherently going to attract more capital. It’s more attractive to invest in the United States of America.”
Another area that Stephenson highlighted about the Trump presidency is the loosening of regulations.
“There’s a lot of debate around President Trump, and I have probably been one of his biggest defenders in terms of public policy… Set aside any legislative achievements or anything so far, the one thing that has manifested itself in the early part of this presidency is the regulatory burden has been rationalized,” he said. “In our industry, it has been rationalized. We have had as predictable regulation as we’ve had in my career almost. It’s been a really good situation to have a regulatory framework that we look at and say ‘from a businessman’s, from a business person’s standpoint, decision-making has been simplified.’ That’s good thing.”
The Justice Department’s antitrust suit over Time Warner
Not everything has been predictable for AT&T, though.
Earlier this month, the Justice Department, in a shift from decades of precedent, sued to block AT&T/DirectTV’s planned $108 billion acquisition of entertainment giant Time Warner (TWX) claiming the deal would “substantially lessen competition, resulting in higher prices and less innovation for millions of Americans.”
“I’ve come into this situation with the DOJ where suddenly what I contend is really an excellent environment from a regulatory, predictability standpoint. Now all the sudden I found myself. ‘Wow, what was that, right?'” Stephenson said. “I suddenly find myself from an M&A and capital allocation standpoint, asking: ‘ What is predictable? What can my board plan on?’ So, I’ve had a little curveball thrown here. I’m trying to process this. I think that’s a reasonable question to ask: ‘What does this mean for business people in the United States of America if the Justice Department’s complaint is upheld?”
Earlier in the discussion, he said that AT&T sees “absolutely nothing in this case that is lawfully anticompetitive.” He added that he feels like AT&T has a “darn good case.”
According to Stephenson, the government’s argument is that Turner will raise rates and blackout content to other delivery services helping drive customers to DirectTV, which will allow DirectTV to increase its prices. Stephenson called that premise “patently false.”
“We don’t think that premise holds water,” he said.
He added that they will make concessions, including taking away Turner’s right to blackout content for 7 years and submit any disputes with distributors to “baseball-style arbitration.”
One concession he won’t make is selling assets.
Some have speculated that the government’s move stems from Trump’s dislike of CNN. Trump, who has has been public about his disdain for CNN, which is owned by Time Warner, said during the 2016 campaign that this is a deal that his administration would not approve because it’s “too much concentration of power in the hands of too few.”
“My worry about selling assets is the message that it sends. There’s a lot of noise around this deal as it relates to CNN,” Stephenson said.
He added that they’re not going to start selling assets, which would lend credence to the notion that they’re addressing concerns over CNN.
“We’re not going to do that. That begins to have hints of First Amendment issues.”
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.
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