Cingular, DOJ reach agreement on AT&T Wireless

Cingular Wireless will divest itself of wireless customers and other assets in 13 U.S. markets as a requirement for its $41 billion acquisition of AT&T Wireless Services, according to an consent decree announced Monday by the company and the U.S. Department of Justice.

The Justice Department contends that if the combined company did not divest itself of assets in 11 states, the acquisition would cause higher prices and less wireless innovation. The 11 states covered in the consent decree are Connecticut, Georgia, Kansas, Kentucky, Louisiana, Massachusetts, Missouri, Michigan, Oklahoma, Tennessee, and Texas.

The department's Antitrust Division filed a civil lawsuit Monday in U.S. District Court in Washington, D.C., to block the proposed transaction. At the same time, the Justice Department filed a proposed settlement that, if approved by the court, would resolve its concerns.

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Cingular Wireless will divest itself of wireless customers and other assets in 13 U.S. markets as a requirement for its $41 billion acquisition of AT&T Wireless Services, according to an consent decree announced Monday by the company and the U.S. Department of Justice.

The Justice Department contends that if the combined company did not divest itself of assets in 11 states, the acquisition would cause higher prices and less wireless innovation. The 11 states covered in the consent decree are Connecticut, Georgia, Kansas, Kentucky, Louisiana, Massachusetts, Missouri, Michigan, Oklahoma, Tennessee, and Texas.

The department's Antitrust Division filed a civil lawsuit Monday in U.S. District Court in Washington, D.C., to block the proposed transaction. At the same time, the Justice Department filed a proposed settlement that, if approved by the court, would resolve its concerns.

A Cingular spokesman said the company is satisfied with the decree. "We feel like the DOJ did a thorough job in resolving the merger and the competitive effects of the merger," said Clay Owen, senior director of public relations for Cingular. "We knew that there'd be a chance that divestiture would be required."

Cingular officials continue to expect the transaction to close later this quarter. The company bid on AT&T Wireless in February. The combined entity will have licenses to operate wireless service in 49 of 50 U.S. states, and will serve the top 100 U.S. metropolitan areas.

According to the Justice Department complaint, Cingular Wireless and AT&T Wireless are two of six mobile wireless services providers with a national presence, and the proposed transaction would reduce competition for mobile wireless telecommunications services in 10 markets, and for mobile wireless broadband services in three additional markets.

In nine of those 10 wireless telecommunications services markets, Cingular and AT&T Wireless are, or hold interests in, the two largest incumbent wireless providers, and in all 10 markets the merged firm would be the largest, according to the Justice Department. The merging companies are also two of a limited number of mobile wireless services providers that have launched or are likely to launch mobile wireless broadband services, the Justice Department said.

Under the terms of the settlement, the merged firm must divest AT&T Wireless's wireless services business, including spectrum and customer contracts, in Litchfield, Conn.; Fulton, Ky.; Oklahoma City and Ponca City, Okla.; and Lufkin and Nacogdoches, Texas. In Connecticut, Kentucky and Texas, the merged firm may retain some of AT&T Wireless's wireless spectrum.

The merged firm must also divest minority equity interests in mobile wireless services providers in Atlanta; Topeka, Kan.; Shreveport and Monroe, La.; Pittsfield, Mass.; and St. Joseph, Mo.

To resolve the Justice Department's competitive concerns related to mobile wireless broadband services, the merged firm must divest 10 MHz of contiguous PCS wireless spectrum in Detroit; Knoxville, Tenn.; and Dallas-Forth Worth, Texas.

The IDG News Service is a Network World affiliate.