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$POM 1Q15 10-Q: On Feb. 26, 2015, District of Columbia FY15 Budget Support Act of 2014 became law, effective Jan. 1, 2015. Law revised apportionment methodology for corporate tax and included phase-down of corporate tax rate from 9.975% to 8.25% by FY19. Change in law required Pepco to re-measure net deferred tax liabilities in 1Q15.
$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.
$NI reaffirmed its 2017 non-GAAP operating EPS guidance of $1.17-1.20 and capital investments outlook of $1.6-1.7Bil. For 2018, the company reaffirmed its non-GAAP operating EPS estimate of $1.26-1.32 and capital investments forecast of $1.7-1.8Bil. $NI still expects to growth non-GAAP operating EPS and dividend at 5-7% each year through 2020.
On LNG exports, Kinder Morgan is exporting 3 Bcf a day to Mexico, which is 70% of the total US exports to Mexico. From a cash tax perspective, the new tax law postpones the date when $KMI begins to pay taxes by approx. one year to 2024. On the Trans Mountain expansion, the company has spent a total of C$930 million as of 2017 end.
Distributable cash flow (DCF), a key metric to measure financial health, rose 4%, to $0.53 a share, primarily due to growth in Kinder Morgan’s natural gas and terminal and products pipelines business. For 2018, $KMI expects DCF to reach $2.05 per share vs. $2 in 2017, adj. EBITDA of approx. $7.5Bil, and plans to invest $2.2Bil in growth projects.
Kinder Morgan posted a loss of $1.05Bil ($0.47 per share) in 4Q due to the new tax law. $KMI recorded a one-time tax charge of $1.4Bil since it has to revaluation of certain assets. Fourth quarter sales increased 7.2% reaching $3.63Bil vs. 4Q16. The company's Board has approved a cash dividend of $0.125 per share for the fourth quarter.