Cingular Wireless emerged Tuesday with the winning offer for AT&T Wireless in an acquisition that will create the largest U.S. wireless carrier.
The winning offer was for $41 billion in cash, which translates to $15 per share of AT&T stock, Cingular said in a statement Tuesday morning. Both the AT&T Wireless and Cingular boards have approved the offer, which now must win approval of the federal government and AT&T Wireless shareholders. Cingular said it expected the deal to be closed by the end of 2004. Cingular said that it expected the acquisition to lead to the accelerated roll-out of new services.
"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," Cingular's CEO Stan Sigman said in a statement. The combined company will have 46 million customers, which is roughly ten million more customers than Verizon Wireless, currently is the largest U.S. carrier. The combined companies will have service available in 49 states and 97 of the top U.S. markets. Cingular said that it expected that consolidation of the two carriers' networks and operations would result in savings of more than $1 billion in 2006 and $2 billion in 2007.
The acquisition not only creates the largest wireless operator in the U.S. but also the largest GSM network in the country. Both operators primarily use GSM, while Verizon Wireless and other U.S. carriers use CDMA technology. In its statement, Cingular said that the enlarged GSM network will speed deployment of high-speed third-generation (3G) networks in the future. Both operators have rolled out slower next-generation GSM-based technology such as EDGE that delivers typical speeds in the 50 Kbps range.
However, competition in the area of high-speed wireless data has heated up in recent months with Verizon Wireless' announcement that it will start rolling out its EV-DO network nationwide next summer, which provides speeds of between 300 Kbps and 500 Kbps. In addition, Nextel has started trialing a wireless wide area network system in North Carolina based on 802.20 technology that also delivers broadband speeds. Other carriers, most notably Japan's NTT DoCoMo and Nextel, have been mentioned as possible suitors for AT&T Wireless but did not tender serious offers. DoCoMo currently owns 16 percent of AT&T Wireless.
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