<p>Cingular Wireless won the bidding war to acquire AT&T Wireless Services for nearly $41 billion in cash, a deal that would create the nations largest cell phone company.</p><p>The merger between the second and third largest U.S. wireless companies was announced as Britains Vodafone Group PLC withdrew from the contest after four days of rising bids.</p><p>This combination is expected to create customer benefits and growth prospects neither company could have achieved on its own and will mean better coverage, improved reliability, enhanced call quality and a wide array of new and innovative services, said Stan Sigman, president and chief executive of Atlanta-based Cingular.</p><p>Combined, Cingular and AT&T Wireless will have 46 million subscribers, enough to leapfrog Verizon Wireless market leading customer base of 37.5 million.</p><p>Cingular, a joint venture between SBC Communications Inc. and BellSouth Corp., said its winning bid was for $15 per share, an amount that would value AT&T Wireless at $40.7 billion. Cingular will also assume $6 billion of debt owed by AT&T Wireless.</p><p>The agreement, subject to the approval of AT&T Wireless shareholders and regulatory authorities, may be the largest all-cash transaction in U.S. history, said David Caouette, spokesman for AT&T Wireless.</p><p>The combined company will carry the Cingular name and once a deal is approved billing and other issues will be merged, though there will be no immediate impact on customers, said Ralph de la Vega, Cingulars chief operating officer.</p><p>In a telephone interview Tuesday with The Associated Press, de la Vega said federal regulators may ask the combined company to divest in certain assets where their is overlap even though he believes that is unnecessary.</p><p>We think that there should not be any divestitures required, de la Vega said. The greatest competition is perhaps right here in the U.S. so the consolidation of two of the players should not cause any problems for competitors. Even in areas of overlap, there is sufficient competition not to warrant it.</p><p>As far as possible jobs cuts or management changes, de la Vega indicated there could be some, though he would not elaborate. The combined company has about 70,000 employees.</p><p>Its a little bit too early to talk about that, he said. I think youll see something in the next few days. One of the things that will happen is we will do an assessment of the management team thats there.</p><p>Added de la Vega: We will look at the combined operations and look for where there is overlap and see where we can be more efficient.</p><p>Caouette indicated some employees would be affected because large-scale mergers create duplicate functions that can be eliminated. AT&T Wireless had already planned to cut 1,900 jobs from of a work force of 31,000 by the end of 2005.</p><p>The bidding heated up early Tuesday when Cingular upped its bid a final time to more than $40 billion, de la Vega said. He said it is not clear if Vodafone dropped out of the race before or after Cingular upped its bid.</p><p>The interactions were every heavy until early this morning, when the agreement was reached, de la Vega said. Its been a long night, but I feel great this morning.</p><p>In addition to paying AT&T Wireless shareholders a 27 percent premium over the companys closing stock price of $11.82 on Friday, the merger may ease the cutthroat competition in the U.S. cellular market, trimming the number of national players from six to five.</p><p>John D. Zeglis, AT&T Wireless chairman and CEO, said in a statement that the transaction means a handsome return for investors, advantages for customers and more opportunities for employees.</p><p>The deal brought to an end a heated bidding war that saw both companies boosting their offers following a Friday deadline to submit bid sets by AT&T Wireless.</p><p>Cingular, which had 23.4 million customers late last year, opened its bidding at $13 a share, or $35 billion, two sources told The Associated Press on condition of anonymity. It then raised its offer to $14 a share early Monday; Vodafone matched Cingulars offers in each stage of the process, a source said.</p><p>This is a great day for the wireless customers in the U.S., de la Vega said. When these companies combine, one of the biggest benefits for customers is well have broader geographic coverage. This combination reduces roaming significantly. It gives us capacity for growing our customer base and its a foundation for new services.</p><p>A Vodafone deal would have required the British cell phone giant to sell its 45 percent stake in Verizon Wireless.</p><p>After announcing it had dropped out, Vodafone said Tuesday that it remained committed to its existing position in the U.S. market with its successful partnership in Verizon Wireless.</p><p>AT&T Wireless share price has risen steadily in recent weeks on news that it was putting itself on the auction block.</p><p>The carrier, based in Redmond, Wash., has more than 22 million subscribers, including a sizable base of corporate clients who tend to use more services and spend more money.</p><p>However, the company has struggled in recent months.</p><p>Late last year, it couldnt add new subscribers because of a glitch in a new software system designed to improve customer service.</p><p>AT&T Wireless also has acknowledged that it lost more customers than it gained under new federal rules that took effect in late November allowing cell phone users to change carriers without losing their phone numbers. The company has not released specific figures.</p><p>It was unclear whether NTT DoCoMo of Japan, which owns 16 percent of AT&T Wireless and decided against bidding to acquire the rest, would seek a role in the merged company.</p><p>SBC Communications Inc. owns 60 percent of Cingular, while BellSouth owns 40 percent.</p>
