Cingular Wins AT&T Wireless

AT&T Wireless confirmed Tuesday that Cingular Wireless has won the bidding war for its assets, jumping ahead of other suitors with a $41 billion cash offer.

Cingular, a joint venture between SBC Communications Inc. and BellSouth Corp., made the bid for the nation's third-largest cellular company early Tuesday morning, trumping a late bid from Britain's Vodafone group, which was valued at $38 billion. Vodafone is one of the major mobile players in Europe, but only has a small role in the United States, where it owns a 45% stake in Verizon Wireless.

"At the end of the day, Cingular wanted it more than Vodafone," independent telecom analyst Jeff Kagan said in an E-mail statement. "It strengthens their business offerings, gives them a high-speed wireless network, ... and gives them a way to offer all sorts of new innovative growth services like wireless local phone service to the home."

The combined company will become the country's largest wireless carrier, with 46 million customers on a digital network covering 49 states and 97 of the top 100 markets. The combined 2003 annual revenues of the two companies would have exceeded $32 billion.

Under the terms of the deal, already approved by both companies' boards, AT&T Wireless shareholders will receive $15 per common share of stock. Subject to the approval of shareholders and federal regulators, the deal is expected to close late this year.

The merger is the first bit of consolidation in the wireless space, where observers have long expected trimming. Expect one or two more mergers, probably fairly soon, Kagan said. "Vodafone has signaled they want to own and operate a wireless network, so I expect them to try for another like Nextel or T-Mobile."