NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News  » Business » Cingular buys AT&T Wireless for $41 billion

Cingular buys AT&T Wireless for $41 billion

February 17, 2004 20:17 IST

US's biggest mobile phone company was on created on Tuesday, February 17, when Cingular Wireless agreed to buy AT&T Wireless Services for about $41 billion.

Cingular's bid topped a rival $38 billion bid from Vodafone of Britain, the world's largest wireless phone provider which also owns a 45 per cent stake in the largest US cellular phone company, Verizon Wireless.

AT&T Wireless is the second-largest wireless carrier, based on revenues, in the United States. With 21.980 million subscribers as of December 31, 2003, it has revenues of more than $16.6 billion over the past four quarters.

The new the combined company of Cingular and AT & T Wireless will have 46 million customers and will create the largest GSM network in the United States with spectrum in 49 states and coverage in 97 of the top 100 markets.

The combined 2003 annual revenues of the two companies is expected to exceed $32 billion.

Cingular is jointly owned by Baby Bells SBC Communications Inc and BellSouth Corp. SBC will contribute about $25 billion and BellSouth will pay $16 billion to buy AT&T Wireless.

"This is great news for America's wireless users. By combining the strengths of these two companies we expect to accelerate the availability of advanced wireless services for consumers," said Cingular Wireless CEO Stan Sigman in a statement.

The acquisition is expected to be completed as soon as late 2004 and of shareholders of AT&T Wireless will receive $15 cash per common share.

Cingular estimates that the two companies combined together will provide $1 billion in savings by 2006 and more than twice that in 2007.

"Today's announcement is a triple win for AT&T Wireless shareowners, customers and employees. For shareholders, the transaction provides a handsome return on investment. For customers, this means all the advantages only the nation's largest wireless company can provide.  For employees who become part of the combined company, this means more

than they otherwise would have had with AT&T Wireless as a standalone company," AT&T Wireless CEO John Zeglis said the joint statement.

Cingular's statement did not give details about the staffing level of the combined company or say what the new management or the name of the new company will be.