AT&T to boost capex by $1B and spend $200M on employee bonuses

AT&T confirmed that it will increase capital spending by $1 billion next year in response to the tax reform bill passed by Congress. The new law slashes the corporate tax rate from 35% to 21%, and AT&T has been telling investors for several weeks that passage of the bill would enable the company to boost its 2018 capital spending by $1 billion.

Historically, AT&T invests more in its business each year than any other U.S. company. Telecom companies and oil companies are traditionally the biggest capital spenders, and AT&T often leads the pack by a wide margin.

AT&T’s 2017 capital spending was $16.5 billion through the end of the third quarter, putting the company on track to spend $22 billion for all of 2017. Prior to this announcement, analysts expected AT&T to spend at least $22 billion in 2018.

The company also plans to spend $200 million on employee bonuses. AT&T said that once tax reform is signed into law, it will pay special $1,000 bonuses to more than 200,000 U.S. employees. All union-represented, non-management and front-line managers are set to receive the bonus, and if President Trump signs the tax reform bill before Christmas, the bonuses will be paid over the holidays.

AT&T CEO Randall Stephenson praised Congress and President Trump for bringing U.S. corporate taxes
“in line with the rest of the industrialized world.” The passage of the tax reform bill provided Stephenson with an opportunity to praise the federal government at a time when AT&T is at loggerheads with the Justice Department over its proposed $85 billion purchase of Time Warner. The Justice Department is taking AT&T to court in an effort to block the deal, but Stephenson has said AT&T will be able to adjust its proposal and win federal approval.

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