Cingular agrees to buy AT&T Wireless; would create nations largest cellular carrier

<p>Cingular Wireless, the nations No. 2 mobile phone provider, has agreed to acquire third-largest AT&T Wireless for more than $40 billion, a deal that could create the nations largest cellular subscription base, the company announced Tuesday.</p><p>The deal, confirmed after the British company Vodafone Group PLC said it had withdrawn from the two-way bidding war, creates a combined company with a potential 46 million subscribers, Cingular said Tuesday in announcing the agreement.</p><p>The current market leader, Verizon Wireless, reported 37.5 million subscribers in its quarterly earnings report last month.</p><p>This is great news for Americas wireless users, said Stan Sigman, president and CEO of Atlanta-based Cingular in confirming his companys winning bid, which is subject to the approval of AT&T Wireless shareholders and federal regulatory authorities.</p><p>Cingular, a joint venture between SBC Communications Inc. and BellSouth, said its winning offer was $15 a share, or about $41 billion.</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 for consumers, Sigman said.</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 to stay in the running.</p><p>Cingular, which currently has 23.4 million customers, opened its bidding at $13 a share, or $35 billion, over the weekend, two sources told The Associated Press on condition of anonymity. It then upped its offer to $14 a share for the Redmond, Washington-based AT&T Wireless early Monday; Vodafone matched Cingulars offers in each stage of the process, a source said.</p><p>A Vodafone deal would have required the British cell phone giant to sell its 45 percent stake in Verizon.</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>David Caouette, a spokesman for AT&T Wireless, said he believes the deal _ which includes assumption of $6 billion in debt for total of $46.7 billion _ is the largest all-cash transaction in U.S. history.</p><p>Caouette could not say how many layoffs were anticipated, but speculated that some employees would be affected because large-scale combinations meant eliminating duplicate functions.</p><p>Any layoffs would be in addition to the 1,900 jobs AT&T Wireless previously announced plans to eliminate out of a national workforce of 31,000 by the end of 2005.</p><p>AT&T Wireless share price has risen steadily in recent weeks on news that it was putting itself on the auction block. The carrier 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>But 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. The company also has acknowledged that it has lost more customers than it had gained under the 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>

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