Showdown looms over AT&T Wireless bid

With bidding for AT&T Wireless due to close at 5 p.m. Eastern time Friday, whoever loses may put their failure down to bad luck. Today is Friday the 13th, a day believed to bring bad luck in some cultures, so for a superstitious executive, perhaps not a good day to have to make a $30 billion-plus decision that could make - or break - a company.

Vodafone Group PLC, Cingular Wireless LLC, Nextel and NTT DoCoMo are among the candidates expected to enter the bidding fray for AT&T Wireless, the third-largest mobile operator in the U.S. All of them are holding their cards tight to their chests.

In a terse, one-sentence statement issued earlier this week, Vodafone said it is studying whether a bid for AT&T Wireless is "in the interests of its shareholders." In its Friday edition, The Wall Street Journal, citing inside sources, reported that the Newbury, England, wireless giant has decided to make a $34 billion bid.

Currently, Vodafone has a foot in the U.S. through its 45% stake in Verizon Wireless. But owning minority stakes and having no say in operations aren't part of the group's strategy. Over the past several years, Vodafone has demonstrated a keen interest in controlling operators with GSM networks, which Verizon lacks. Such control is linked to its strategy of establishing a global brand, harmonized customer services and economies of scale in its phone and network infrastructure equipment.

Even if Vodafone's European customers using triband phones are now able to roam on GSM networks operated by T-Mobile USA and others, the British operator is missing out on attractive revenue opportunities by having to fork over a good chunk of money for using this infrastructure.

NTT DoCoMo is seen as an unlikely bidder. In 2001, at the height of the 3G wireless frenzy, the operator paid around $9.8 billion for a 16% stake in AT&T Wireless, only to have to the value of that investment shrink after the free-fall of the U.S. operator's shares.

Despite the drop in the value of its investment, NTT DoCoMo has a financial arrangement with AT&T Wireless over the latter's planned 3G rollout. Under the deal, AT&T Wireless is committed to use Wideband Code Division Multiple Access technology, which is used by NTT DoCoMo in Japan. The U.S. operator must connect at least 1,000 cell sites in four cities by the end of December 2004. Otherwise, NTT DoCoMo can demand that AT&T buy back its stake. The deal is still in effect, NTT DoCoMo spokesman Takuya Ori said Friday.

Citing informed sources, the Japanese business newspaper Nihon Keizai Shimbun reported Friday that NTT DoCoMo has abandoned plans to acquire AT&T Wireless largely for financial reasons.

The Japanese operator declined to comment on the report or its decision whether to place a bid on Friday.

Cingular, also a GSM operator, has signalled its interest in gobbling up AT&T Wireless to gain much-needed additional spectrum and infrastructure to fill gaps in its national network. The operator, the second largest mobile phone company in the U.S. after Verizon, is a joint venture between SBC and BellSouth.

The IDG News Service is a Network World affiliate.