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AT&T Wireless to reveal company auction details today

Posted on: Thursday, 22 January 2004, 06:00 CST

AT&T Wireless plans to disclose today details of an auction of the company, say two executives at companies involved in the bidding process.

The announcement would be the first time the No. 3 U.S. cellphone carrier has officially admitted it's on the block. Its board voted this week to proceed with the auction after receiving interest from numerous suitors. The interest from others followed reports that the company was in merger talks with Cingular Wireless.

The details will come along with the company's report of fourth-quarter earnings today. AT&T Wireless on Wednesday announced without explanation that it had moved up the date of its earnings release to today from Jan. 27. It declined comment on the change in plans or sale plans.

Deutsche Bank analyst Viktor Shvets says he suspects AT&T Wireless felt it had to move up its earnings report to discuss ''the speculation about consolidation . . . and any decision the board of directors has made over the past couple of days.''

Last weekend, Cingular, the No. 2 wireless carrier, and its co-owners, phone companies BellSouth and SBC Communications, submitted an all-cash offer for AT&T Wireless with a premium above its $27 billion market value as of Friday.

Others in the hunt include Japan's NTT DoCoMo, which owns 16% of AT&T Wireless, No. 5 Nextel Communications, Deutsche Telekom (owner of No. 6 T-Mobile) and Britain's Vodafone, which owns 45% of No. 1 U.S. carrier Verizon Wireless.

Speculation about a potential deal has boosted AT&T Wireless' shares nearly 35% since last week, including a 5.8% gain Wednesday to $10.99.

Most investors have expected a poor fourth-quarter report. AT&T Wireless has had problems activating customers and also suffered technical glitches in complying with a new federal rule that lets customers keep phone numbers when switching carriers.

But Guzman & Co. analyst Pat Comack says a better-than-expected earnings report could push AT&T Wireless' acquisition price higher. ''They might offer some information that might goose the stock (and) get this auction going,'' Comack says.

Analysts say consolidation is needed in the U.S. wireless sector, which has six national carriers. Even as revenue and customers grow, carriers face marketing and price wars that could hurt profits.

Cingular, for one, reported Wednesday that operating income fell in the fourth quarter despite revenue growth of 5.6% to $3.9 billion. Operating expenses rose 12.4% to $3.6 billion; average monthly revenue per user fell $2.81 from last year to $49.03.

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