AT&T Inc., the phone carrier locked in a battle with the U.S. government over its Time Warner Inc. acquisition, lauded President Donald Trump and Congress for their tax-cut bill and said 200,000 U.S. workers will get a special $1,000 bonus to celebrate.
The payout is part of an effort by Corporate America to defy criticism that tax cuts for companies will benefit shareholders more than workers. Boeing Co. separately pledged $300 million Wednesday for employee training, improved workplace infrastructure and corporate giving, crediting the tax cuts.
Trump cited AT&T’s bonus plan at a news conference Wednesday. “That’s because of what we did. So that’s pretty good,” he said.
AT&T’s relationship with the Trump administration has had its ups and downs. Even as Stephenson praised the president, the administration’s Justice Department is busy preparing its antitrust case against AT&T’s $85.4 billion acquisition of Time Warner. AT&T Chief Executive Officer Randall Stephenson has characterized the deal as strategically vital, but Trump has said the transaction would harm consumers.
On the other hand, AT&T scored a victory when the Republican-led Federal Communications Commission gutted utility-style regulations for internet service providers.
AT&T has an immediate financial incentive to persuade the Justice Department to end the Time Warner suit instead of slogging through months of legal wrangling. A settlement would let AT&T avoid paying hundreds of millions of dollars in fees to creditors to amend the terms of bonds issued to finance the merger, according to Bloomberg Intelligence.
Whether or not AT&T’s employee bonuses are an olive branch to the Trump administration, there are better reasons for the Justice Department to settle the case, said Walt Piecyk, an analyst with BTIG LLC.
“The DOJ should be reconsidering its lawsuit based on its shaky merits, not some celebratory tax-cut bonus to AT&T employees,” Piecyk said.
AT&T’s payment will go to union-represented, non-management and front-line management employees, the company said Wednesday. The Dallas-based telecommunications giant also reiterated its plan to invest an additional $1 billion in the U.S. next year.
“This is a capital-freeing event,” Stephenson said of the tax bill at an Economic Club of New York luncheon on Nov. 29. If Trump signs the bill before Christmas, employees will get their bonus over the holidays, AT&T said.
Phone carriers are among the companies that are likely to increase their capital spending because of the bill, which allows immediate tax deductions for such investments. AT&T and its rivals are upgrading their networks to provide faster speeds and more ubiquitous coverage as more devices get connected to the internet.
In the 2016 U.S. elections, Republican candidates got 62 percent of $2.7 million in donations to federal candidates from AT&T’s political action committee that pools contributions from employees, according to the Center for Responsive Politics.
Stephenson has averaged a bonus of about $5.2 million over the past three years.