Cingular wins bid for AT&T Wireless

Cingular Wireless LLC Tuesday said it has agreed to buy AT&T Wireless for around $41 billion.

The deal, which still requires standard approval from AT&T Wireless shareholders and federal regulatory authorities, would create the largest company in the U.S. wireless market, with 46 million customers, Cingular said. The deal is expected to become finalized by the end of the year, Cingular added.

The deal was signed in New York around 2 a.m. after a weekend of bidding and counter-bidding between Cingular and Vodafone Group PLC, according to U.S. media reports.

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Cingular Wireless LLC Tuesday said it has agreed to buy AT&T Wireless for around $41 billion.

The deal, which still requires standard approval from AT&T Wireless shareholders and federal regulatory authorities, would create the largest company in the U.S. wireless market, with 46 million customers, Cingular said. The deal is expected to become finalized by the end of the year, Cingular added.

The deal was signed in New York around 2 a.m. after a weekend of bidding and counter-bidding between Cingular and Vodafone Group PLC, according to U.S. media reports.

Vodafone Group PLC, Europe's largest mobile phone company, said it withdrew from the bidding after it "concluded that it was no longer in its shareholder's best interests to continue discussions." The company, based in Newbury, England, said it remains committed to its current partnership in Verizon Wireless, the dominant operator in the U.S. wireless market.

Vodafone owns a 45% share of Verizon Wireless in a partnership that is now four years old. Verizon owns a controlling interest in the mobile phone company.

"It really is a fairly simple story from our side today. In pursuing AT&T Wireless, we were attempting to see if we could create more shareholder value than we currently have with Verizon," said a Vodafone spokesman who declined to be named.

"This was not a question of price, since a company the size of Vodafone has access to funding. We had laid down a benchmark in terms of price early on. Beyond that benchmark, there was no point in proceeding as no value was created for shareholders," he said.

Representatives from Cingular, in Atlanta and AT&T Wireless Services could not immediately be reached for comment.

The purchase of AT&T Wireless by Cingular will consolidate the U.S. wireless market from six major companies down to five. The other four companies in the market are Nextel, T-Mobile USA, Sprint and Verizon.

Cingular is currently the second-largest wireless company in the U.S. with 24 million subscribers. The operator is jointly owned by SBC Communications Inc. of San Antonio, which owns 60%, and BellSouth of Atlanta, according to the company's Web site.

AT&T Wireless employs approximately 30,000 people in some 500 locations across the U.S., and as of the end of last year reported about 22 million consolidated subscribers, the company said. AT&T Wireless split from AT&T in July 2001 to become an independent company.

Along with creating the largest GSM network in the U.S., Cingular's acquisition of AT&T Wireless will speed the company's ability to offer advanced wireless data services and upcoming 3G services to customers due to its improved spectrum holdings, Cingular said.

Should the deal between Cingular and AT&T Wireless receive full approval, the newly combined company will knock Verizon Wireless from its current number one position in the U.S. wireless market down to number two, with 36 million subscribers.

"Vodafone really wanted the GSM footprint that AT&T Wireless would have provided and it won't be happy with the number two position," said Paolo Pescatore, senior analyst for IDC in the U.K. "The question now is what will Verizon do to re-establish its position?"

The IDG News Service is a Network World affiliate.