Only Sprint Wouldn't Benefit From A U.S. Tax Reform: Expert

Sprint is the only major wireless carrier in the United States that wouldn't benefit from a federal tax reform, whereas its three competitors would all enjoy varying gains from such an initiative, Craig Moffett of MoffettNathanson wrote in a research note earlier this month. Sprint already isn't expected to pay cash taxes in the coming years so any interest deductibility cap imposed on its performance wouldn't have an impact on its annual tax bill. Likewise, the fact that AT&T traditionally pays a low rate of cash taxes and isn't projected to have its operations hit with more such burdens in the near future would likely limit the benefits it could expect from a major tax reform that's currently being planned by the Congress, as suggested by the Trump administration.

On the other hand, both Verizon and T-Mobile would significantly benefit from the change, with the latter's Chief Financial Officer Braxton Carter recently estimating that the third largest mobile service provider in the country wouldn't have to pay cash taxes for approximately seven more years should the presently discussed tax bills be enacted in their current form. While the proposals are likely to be tweaked on their way through the Congress, MoffettNathanson believes T-Mobile and Verizon will disproportionally benefit from them compared to the rest of the industry and the only question that remains is how big of an advantage will the two wireless carriers receive.

The actual effects of the tax reform remain unclear, with the best-case scenario for consumers being lowered prices on services in highly competitive segments like the mobile wireless one. While that may be a realistic possibility in the long term, no such changes are expected in the coming years, Mr. Moffett said, adding that the first palpable result of the tax reform will be rising profits posted by mobile service providers. While AT&T may benefit from the regulatory change, the Dallas, Texas-based telecom giant is presently on less than stellar terms with Washington after the Department of Justice sued it over its proposed acquisition of Time Warner. Regardless and unsurprisingly, AT&T is a supporter of the tax reform, much like T-Mobile and Verizon.

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Dominik Bosnjak

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Dominik started at AndroidHeadlines in 2016 and is the Head Editor of the site today. He’s approaching his first full decade in the media industry, with his background being primarily in technology, gaming, and entertainment. These days, his focus is more on the political side of the tech game, as well as data privacy issues, with him looking at both of those through the prism of Android. Contact him at [email protected]