http://biz.yahoo.com/rc/040217/telec...ireless_4.html

 

Reuters
Cingular clinches AT&T Wireless for $41 bln
Tuesday February 17, 9:22 am ET
By Sinead Carew and Jessica Hall


(Adds executive quotes, details, pre-market activity, changes byline, dateline previous LONDON/NEW YORK)
NEW YORK, Feb 17 (Reuters) - Cingular Wireless on Tuesday won an auction for smaller rival AT&T Wireless Services Inc. (NYSE:AWE - News) with a $41 billion offer that edged out Britain's Vodafone Group Plc and secured its future as the largest wireless carrier in the United States.

The combined company leapfrogs current market leader Verizon Wireless (NYSE:VZ - News), giving it 46 million customers, annual revenues of more than $32 billion and a presence in 97 of the top 100 U.S. markets.

The $41 billion bid, worth $15 per share, was the largest all-cash offer in history, according to merger and acquisition research firm Dealogic, and marked a 30-percent premium over AT&T Wireless' closing stock price of $11.82 on Friday. The U.S. financial markets were closed on Monday for the President's Day holiday.

The deal also marked the start of long-awaited consolidation in the crowded U.S. wireless market in which six national brands and a handful of regional players are battling for market share as subscriber growth is slowing.

Cingular, which is owned by local telephone companies SBC Communications Inc. (NYSE:SBC - News) and BellSouth Corp (NYSE:BLS - News), hiked its offer from $14 a share late on Monday in what sources close to the talks called an 11th-hour effort to cement a deal.

In pre-market trading on Tuesday, shares of Redmond, Washington-based AT&T Wireless jumped to $13.92 on INET.

Over the past month, shares of AT&T Wireless had surged 38 percent as investor enthusiasm for a merger overshadowed the company's weak fourth-quarter performance and forecast for customer-losses through the first half of 2004.

"We think that the price we paid is a fair price. Yes, AT&T Wireless has some issues...but we think the company was sound before those problems and we view the problems as being temporary in nature," Cingular Chief Operating Officer Ralph De La Vega said in a telephone interview.

In the fourth-quarter, AT&T Wireless lost customers and missed out on several hundred thousand potential new subscribers due to technical and customer-service problems.

Shares of SBC fell to $25 in pre-market trading, down from a closing stock price of $25.05 on Friday. There were no early trades on INET for BellSouth, which closed at $29.55 on Friday.

Analysts had expected Cingular to fight hard to outbid financially powerful Vodafone ( The bid valued AT&T Wireless at almost three times the level its shares were trading at last March.

"You can't just value companies based on today's stock prices. Their value is based on spectrum and services and technology. It's based on being able to deliver the next wave of technology and services we haven't even invented yet," said independent telecommunications analyst Jeffrey Kagan.

Shares in Vodafone (London:VOD.L - News) rose 5 percent in London on investor relief it had not won an earnings-dilutive deal. The world's largest mobile phone group said it had abandoned the auction and would instead stick to its 45-percent stake in Verizon Wireless, the largest U.S. wireless company.

"The markets think it's a good thing that Vodafone hasn't overpaid, although in the long term, of course, it does leave them with a strategic problem in the United States," said global equity strategist Patrik Schowitz at HSBC.

Vodafone said it remained committed to its position in Verizon Wireless. Its partner, Verizon Communications Inc. (NYSE:VZ - News), said, "We've worked together well in the past and we will continue to work well together."

Japan's NTT DoCoMo Inc. (Tokyo:9437.T - News), which on Friday decided against bidding for AT&T Wireless, said it would weigh its options in the wake of the Cingular deal, which will give it cash in exchange for its 16-percent stake in AT&T Wireless.

The merged company said it plans to use the Cingular brand name, tossing aside the AT&T Wireless name.

Cingular declined to comment on the management team for the combined company. Analysts said they expected AT&T Wireless Chairman John Zeglis to leave the company once the deal closes.

SBC and BellSouth said the deal would hurt their earnings through 2006. But a merged Cingular expects to save billions of dollars by cutting overlapping staff and assets, and it expects to generate positive free cashflow in 2005.

De Le Vega also said Cingular did not believe it should be required to exit any markets to appease any regulatory concerns about its new size.

"We don't think there should be any divestitures, with the number of competitors we have ,we don't see why that would be a requirement," De La Vega said. (Additional reporting by Kirstin Ridley, Siobhan Kennedy and Santosh Menon in London; Tom Johnson in New York; Marie Maitre in Paris; Yukari Iwatani Kane and Yoshiyasu Shida in Tokyo)

 

yup just saw it on cnn

 

so what does this mean for myself? im a ATTWS gsm customer.

 

Sprint just moved up from the #4 carrier to the #3 carrier

Used to be:
1.Verizon Wireless
2.Cingular Wireless
3.AT&T Wireless
4.Sprint PCS

Now it is:
1.Cingular + AT&T
2.Verizon
3.Sprint

 

Thank goodness I waited to switch...

 

=/ i was gonna switch from cingular to at&t in the coming month but i guess theres no point anymore. my friend's family switched from cingular to at&t a few months ago too so i guess they're going back to cingular again.

 

Not that big of a deal now...:o

 

Is that based on overall subscribers?

 

yes

 

20, 30 and 40+ million subscribers roughly.

 

 

cingular and awe acount for 45 million customers, verizon is 37 million

 

all this means is that they have more customers not a better network....

 

that you are right on. it will be a while until cing/awe get their shit together to provide a network like verizon. but at least att will have a more respectable gsm coverage map than before

 

sik

 

Hater.

 

we're all hating ken

 

Nextel.

 

cdma technology (verizon/sprint) vs gsm technology (cing, att, tmob)

hmm, better network...maybe more complete network...but better? thats a strong word there. which technology is older, and which technology is actually better?

how long has cdma been out...compared to gsm...that is the only thing that is makes cdma more reliable network, right this second. What's going to happen to cdma when gsm becomes complete.

whats the next step after cdma...?!? anyone

 

i believe cdma compared to tdma can handle more traffic

 

i totally agree...GSM when you get service the sound quality is fuckin amazing and someone told me some statistics but i forgot them already...but cdma has coverage...

 

oh man oh man...
at&t isn't even worth 41 cents.

they're gsm coverage is terrible.