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$T received approval from Brazil’s antitrust authority, the Conselho Administrativo de Defesa Economica (CADE) for its pending acquisition of $TWX. Despite getting all required approvals outside the U.S., the merger transaction remains under review by the U.S. Department of Justice. $T expects the transaction to close by the end of 2017.
$T said it would expect to continue grow video customers with its DIRECTV NOW outpacing its linear customer counts in the sense of net additions. But in kind of total video customer base, the company does believe it has the opportunity to continue to grow just like it did in 4Q17.
$T will increase 2018 capital investments by $1Bil with tax reform. Even with that, $T expects significant free cash flow growth in 2018 and going forward with dividend payout ratio improving into high 50% range this year. And $T is committed to deleveraging after $TWX closes with plans to return to historic levels by end of 2020, if not before.
$T added nearly 600,000 IP broadband customers during 2017. Broadband penetration rate in the company's fiber footprint, where it has marketed fiber service more than 24 months, are nearing 50%. Last year alone, the company doubled the number of IP broadband subscribers in its fiber footprint.
At the end of 4Q17, $T had 51.1MM Consumer Mobility subscribers. In the quarter, Consumer Mobility lost 108,000 total subscribers with 320,000 postpaid, and 140,000 prepaid net adds offsetting a loss of 533,000 reseller and 35,000 connected device subscribers. Consumer Mobility postpaid churn was 1.18%, down from 1.25% last year.
At the end of 4Q17, $T had more than 90MM business wireless subscribers. Business Solutions added 221,000 postpaid subscribers and added 2.6MM connected devices in 4Q. Postpaid business wireless subscriber churn declined to 1.08% from 1.11% last year. Also, $T added 7,000 high-speed IP broadband business subscribers.
For 2018, $T expects adjusted EPS in the $3.50 range and free cash flow of about $21Bil. The company sees capital expenditures approaching $25Bil, including $23Bil net of expected FirstNet reimbursements and inclusive of $1Bil incremental tax reform investment.
$T reported a jump in 4Q17 earnings reflecting the impact of the Tax Cuts and Jobs Act. Net income soared to $19Bil or $3.08 per share from $2.4Bil or $0.39 per share in 4Q16. Revenue slid 0.4% to $41.7Bil on declines in legacy wireline services, wireless service revenues and domestic video. Adjusted EPS increased to $0.78 from $0.66.
The second largest US wireless carrier $T reported a net increase in total wireless subscribers of 2.7MM to reach 141.6MM in service in 4Q17. The company had a net gain of 541,000 postpaid subscribers and added 140,000 prepaid subscribers, including 85,000 prepaid phone subscribers. It had 681,000 branded net adds in the quarter.
The largest pay TV operator $T gained 161,000 linear video subscribers for the 4Q17 as DirecTV Now subscribers more than offset traditional video declines. The company ended the quarter with 25.2MM total video subscribers, down 1.2% from last year.
In recognition of vote by the U.S. House of Representatives to pass tax legislation, $T reiterated its plan to invest an additional $1Bil in the United States in 2018 if the bill is signed into law. $T CEO Randall Stephenson said this bill will spur much-needed investment and economic growth in the United States.
$T CFO John Stephens discussed priorities for the coming year at a meeting. The company continues to expect net video gains in 4Q17, including DIRECTV NOW. $T is also on track to achieve $2.5Bil or more in annualized cost synergies from the DIRECTV acquisition by mid-2018. AT&T’s other 2018 priorities include building out the FirstNet network.
$T reiterated its commitment to invest an additional $1Bil in the United States in 2018 if the House bill is signed into law, in recognition of vote by the House of Representatives to pass the first meaningful tax reform in decades. A permanent corporate tax rate of 20% will stimulate domestic investment and create jobs.
$DISH CEO Charlie Ergen said $T's proposed acquisition of $TWX may not yet be dead. The $85.4Bil deal was being scrutinized by the US Department of Justice, which has sought significant asset sales to approve it. “By no means is it dead and I think there certainly may be ways they can work it out,” Ergen said.
For competitive environment, so far $T has seen some rational activity through $AAPL iPhone 8 launch and most recently activities that are going on, so it is optimistic. $T's margins are very solid. But $T believes it can compete and win based on product offerings and that extensive nature promotional activity is not necessary for iPhone X launch.