President Donald Trump had earlier claimed that he would block the proposed merger between AT&T and Time Warner if he were elected as the President of the United States. This had created a great concern among the executives of both the companies. However, many analysts now argue that the leadership of Trump might bring benefits to the companies.
William Power, a chief analyst at RW Baird, said, “We believe the Trump focus on deregulation and lower tax rates could provide a multiplier effect for AT&T’s businesses. Trump’s push for lower tax rates and less regulation should benefit corporate profitability and capital investment, which should in turn benefit AT&T’s results.”
Power believes that improving the economy will certainly give AT&T an additional boost and a lesser tax rate would “meaningfully benefit AT&T’s profitability and cash flow with no change in economic activity.”
In addition to that, reports also indicate that Trump would loosen the regulation on the telecom enterprise and he might even restore the net neutrality protections. This will offer more freedom to the internet service providers to control the pricing, traffic and access.
AT&T‘s zero-rating practices is already being inspected by the Federal Communications Commission. This practice allows customers to access certain services or apps without disturbing their data caps. For instance, AT&T customers can access the latest streaming service from AT&T, DirecTV Now, without eating up their data cap.
It is significant to note that zero-rating can bring a number of concerns when we consider the competition. Many analysts claim that easing regulation on practices like this will certainly bring tons of benefits. Power also wrote that the chances for the proposed merger between Time Warner and AT&T are a lot higher.
“Time Warner provides a new growth engine, helps diversify the business and adds strong cash flow,” Power added. “Senate hearings last week seemed to be largely favorable, though not altogether surprising. The DOJ will ultimately be the key decision maker, though the vertical nature seems to increase the odds, similar to the previous Comcast-NBCUniversal merger.”
The executives from AT&T are also hopeful that the deal will pass through the regulatory review even though Donald Trump had earlier announced that he would oppose the deal. Reports indicate that the proposed deal between AT&T and Time Warner will bring numerous benefits for both the companies.