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Cingular Wireless Deal Clears Hurdle

Posted on: Monday, 25 October 2004, 22:00 CDT

Oct. 26--Cingular Wireless moved a step closer to its purchase of AT&T Wireless Services after the U.S. Justice Department gave the green light Monday for the $41 billion deal to proceed.

The Federal Communications Commission is expected to follow suit, perhaps as early as Tuesday.

The Justice Department conditioned its approval on Cingular's divestiture of a total of 260,000 AT&T Wireless customers in some markets to ensure Cingular doesn't control too much of the mobile-phone market.

The order also requires Cingular to divest some wireless spectrum in certain markets.

Without the divestitures, the Justice Department said the "combination of Cingular and AT&T Wireless would result in higher prices and reduced innovation for consumers of mobile-wireless services."

The FCC also is expected to order some divestitures.

Even so, the combination would create the nation's largest mobile-phone company, with more than 46 million subscribers after the divestitures. AT&T Wireless had 21.9 million subscribers as of Sept. 30. Cingular had nearly 25.7 million. Verizon Wireless reported 40.4 million subscribers as of the middle of this year.

Specifically, the Justice Department requires Cingular to divest all of AT&T Wireless' customers in Oklahoma City, as well as all of AT&T Wireless' spectrum there.

Cingular also must divest AT&T Wireless' customers in certain smaller markets in Connecticut, Kentucky and Texas. But it can retain some spectrum in those markets.

Additionally, Cingular is required to divest 10 megahertz of spectrum only in Dallas-Fort Worth, Detroit and Knoxville.

Cingular must divest AT&T Wireless' minority interest in Verizon Wireless' business in Pittsfield, Mass., and Athens.

Finally, Cingular must renounce its own minority partnership rights with Alltel's wireless business in Shreveport, La.; and with AT&T Wireless' minority interests with Verizon Wireless in Topeka, Kan., and St. Joseph, Mo.

The FCC's order could include restricting Cingular from bidding for airwave capacity in a January auction for cities where the company holds at least 70 megahertz of frequencies.

The deal is expected to close within a day or two after all regulatory approvals are received, BellSouth's chief financial officer, Ron Dykes, told analysts Monday.

BellSouth owns 40 percent of Atlanta-based Cingular; SBC Communications owns the rest.

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BLS, SBC, AWE, DCM, 9437, VZ, VOD, AT,

Source: The Atlanta Journal and Constitution

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