AT&T CEO Says Reclassification, Not Net Neutrality, Threatens Investment in Networks
Net neutrality rules by themselves wouldn't slow AT&T’s investment in its network, but reclassifying broadband as a Title II common carrier service likely would, AT&T CEO Randall Stephenson said on the company’s earnings call Tuesday. The FCC must stay away from “strident, heavy-handed regulations,” he said. FCC Chairman Tom Wheeler is expected to circulate an order Feb. 5 on reclassifying mobile and fixed broadband under Title II of the Communications Act (see 1501270043).
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AT&T is comfortable with the net neutrality principles delineated by President Barack Obama last year (see 1501140048), Stephenson said. The principles have “no bearing or impact on our investment decisions, none whatsoever,” he said. Reclassification is “a different deal,” he added.
Wheeler can still find a “creative solution” that “doesn't cause the industry to slow down, doesn't cause investment cycles to slow down, does not cause innovation cycles to slow down” as reclassification would, Stephenson said.
Stephenson also said AT&T sees a bright future in Mexico, as exemplified by the company’s recently announced buy of NII Holdings’ Nextel Mexico wireless business (see 1501260068). “The changes in the Mexican legal and regulatory framework make it attractive for a new entrant to invest,” he said. AT&T isn't looking at Canada, Stephenson clarified. “Right now we have about as much as we can, as a company, handle, we’re not prepared to start talking about going north of the border right now,” he said. Stephenson said he remains hopeful AT&T can close on its buy of DirecTV in the first half of the year.
AT&T’s numbers for the quarter came in slightly better than analyst predictions. Similar to Verizon, AT&T said wireless postpaid churn was slightly higher than a year earlier, at 1.22 percent, vs. 1.11 percent in the same quarter last year. The company reported 1.9 million wireless adds, with connected devices making up 1.3 million of that total, including 800,000 connected cars. AT&T added a net 854,000 postpaid wireline customers. AT&T had a net loss of $4 billion, or 77 cents per share, compared with net income of $6.9 billion, or $1.31 per share, a year ago. Revenue came in at $34.4 billion -- 3.8 percent higher than the year-earlier period. AT&T’s net income took a big hit from a previously disclosed $7.9 billion charge for pension-related costs. The call was Tuesday after our deadline.