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AT&T confident Time Warner takeover will go ahead as quarterly earnings beat forecasts

Last updated: 00:15 02 Feb 2018 AEDT, First published: 19:15 01 Feb 2018 AEDT

AT&T
AT&T achieved a net addition of 329,000 phone subscribers in the quarter

AT&T Inc (NYSE:T) said it was confident it will complete its US$85.4bn takeover of Time Warner Inc. (NYSE:TWX) as it reported a rise in fourth quarter earnings that beat expectations.

Last year, the US Department of Justice sued to block the deal, announced in October 2016, arguing that it would hurt competition. A trial is due to start on March 19.

“While we remain open to finding some reasonable solutions to address the government’s concern, we do expect this case will ultimately be litigated in court,” chief executive Randall Stephenson said in an analysts call.

 “We remain very confident that we’ll complete this merger.”

Tax cuts lift quarterly earnings

AT&T posted net income attributable to the company of US$19bn, or US$3.08 per share, in the fourth quarter to December 31, compared to US$2.4bn, or 39 cents per share, in the year-ago period.

The results were boosted by US tax cuts under Donald Trump’s new law, which was signed into law late last year.  AT&T said it expects its 2018 effective tax rate to be about 23%, adding an extra US$3bn in cash.

Excluding items, earnings came to 78 cents per share in the fourth quarter, exceeding analysts’ estimates of 65 cents.

Revenue was broadly flat at US$41.7bn against forecasts of US$41.2bn.

Shares rose 3.6% to US$37.45 each in pre-market trade. 

AT&T adds new wireless subscribers

AT&T achieved a net addition of 329,000 phone subscribers who pay a monthly bill, supported by lower customer attrition and a ‘buy one, get one free’ promotion for the iPhone 8.

The wireless carrier lost 67,000 subscribers a year earlier.

The company, which owns satellite television service DirecTV, lost 207,000 traditional US video subscribers in the quarter as more consumers drop pay TV packages and switch to online streaming channels.

AT&T added 368,000 to its cheaper DirecTV Now streaming service.

For 2018, the company expects adjusted earnings of about $US3.50 per share, ahead of market forecasts of US$3.05 per share. It predicts free cash flow of about US$21bn.

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