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Wireless Phone Leaders Say They're Not Worried about Coming Merger

Posted on: Wednesday, 24 March 2004, 06:00 CST

Mar. 25--ATLANTA -- Several top wireless-phone company executives endorsed Cingular Wireless' $41 billion acquisition of AT&T Wireless Services Inc. Wednesday, saying the creation of a new industry giant would benefit them all.

Speaking at an industry trade show here, they also said that there would be further consolidation that would weed out the weakest among them.

What was perhaps more interesting than the wireless fraternity's blessing was how Verizon Wireless chief executive Dennis Strigl dismissed the impact of the merger.

"Consolidation is not going to do anything in the way of helping the carriers who remain," he said at the Cellular Telecommunications and Internet Association's Wireless 2004 show. "People talk about maybe we will see some stabilization of prices. That's crazy."

Executives from six of the seven biggest wireless companies carried on a lively panel discussion at the last day of the trade show, frequently needling each other with jovial and sometimes sharp statements. Notably absent was AT&T Wireless chairman and chief executive John Zeglis.

Of the executives present, Mr. Strigl, who is among the longest serving top wireless executive, took contrarian positions on a couple of key issues, from consolidation to the industry's standing with consumers.

Mr. Strigl's unique stance is noteworthy, because experts broadly agree that Verizon Wireless under his leadership is further distancing itself from rivals by adding subscribers and revenue faster than others.

He said the Cingular-AT&T Wireless deal would not notably reduce competition.

"We [would] have five national competitors," he said. "We have two, three local competitors. We compete with the local companies everywhere we operate."

Several others disagreed and said the deal would benefit the industry by creating a company that had more wireless spectrum, better coverage and a larger reach.

"As a result ... you will have a better network crop up," said Tim Donahue, Nextel Communications Inc.'s president and chief executive. "If you don't have a great network, you are not going to have a business. All of us understand that."

Cingular chief executive Stan Sigman reiterated the company's defense of the merger. "Consumers will have better product and service as we get a concentration of the [wireless] spectrum."

Industry experts said the merger has the potential to benefit the industry, because it would give Cingular the heft and resources to focus on faster data services and improving coverage. Apart, the companies would take longer to address those issues.

"It's definitely great for coverage," said Martin Dunsby, vice president at inCode, a consulting firm. "They'll have a bigger portion of spectrum, an amazing amount of capacity."

The endorsement from Cingular's rivals should help the company get regulatory approval. It also indicated that other deals might be in the offing in the next couple of years.

"Companies that over time don't manage well, won't be around," said John Stanton, chairman of T-Mobile USA. "The beauty of the system is that now the government rules are starting to evolve. I think consolidation is a likely outcome because of the change in government rules."

In 2001, the Federal Communications Commission eliminated a cap on how much spectrum a wireless company could have in each market, effective January 2003.

A little more than a year after the rule changed, Cingular won an auction for AT&T Wireless, the nation's second-biggest cellular provider in February. Together the two companies have more than 45 million customers, to Verizon's 37 million.

Most of the nation's big wireless companies got to their current size through mergers and acquisitions. Verizon, for instance, was created in 2000 through the combination of AirTouch, PrimeCo and the wireless properties of Bell Atlantic and GTE. Cingular was born soon after when SBC Communications Inc. and BellSouth Corp. pooled their wireless businesses together.

While they may have different takes on consolidation, the executives were united in highlighting their growth prospects, citing new camera phones and faster data networks.

Wireless companies have a significant opportunity to gain at the expense of other telecommunications services, said Len Lauer, Sprint Corp.'s president and chief operating officer.

"The hallmark of the wireless industry is innovation," he said. "I don't think we can say that about the local exchange industry and the long distance industry."

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(c) 2004, The Dallas Morning News. Distributed by Knight Ridder/Tribune Business News.

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