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Cingular Wireless Completes $41 Billion Purchase of AT&T Wireless

Posted on: Wednesday, 27 October 2004, 15:00 CDT

Oct. 27--Cingular Wireless LLC took over as the leading provider of cell phone service in St. Louis and the nation on Tuesday when it completed the purchase of AT&T Wireless Services Inc. for $41 billion.

The deal closed within hours of regulators' final approval, subject to the sale of properties in 16 markets. The Federal Trade Commission cleared the deal Monday, and the Federal Communications Commission issued its final order Tuesday morning.

The new Cingular has about 46 million customers and 68,000 employees nationwide. Officials declined to give a breakdown of the number of customers, stores or employees in the St. Louis metro area.

AT&T Wireless shareholders will receive $15 a share in cash. Cingular, a joint venture of SBC Communications Inc. and BellSouth Corp., doesn't have publicly traded stock.

Cingular won't lay off employees before year's end, said Stanley T. Sigman, president and chief executive. He declined to answer specific questions on plans for the AT&T Wireless headquarters in Redmond, Wash., but he said some functions will be consolidated.

The merged company's headquarters will be in Atlanta, Cingular's current home, but Sigman said he won't require all headquarters employees to live there.

Analysts have said they expect thousands of AT&T Wireless employees to be laid off.

Consumer groups estimated that Cingular would have 39 percent of St. Louis wireless consumers after the sale went through. The St. Louis market is among 18 where Cingular was expected to have a third or more of the market's wireless customers, although the government-ordered sales could change that. No divestitures were ordered in this market.

Cingular will have to battle to keep the top spot -- holding onto AT&T Wireless' customers and fending off heavy competition from the four major competitors remaining here as well as regional wireless companies in other markets, analysts said. Cingular could close stores and kiosks in malls where each company had stores, such as Chesterfield and West County.

AT&T Wireless customers can keep their current phones and rate plans. Sigman said Cingular will offer "a compelling plan" to customers who want to switch to a Cingular plan in coming months.

He gave no details, but said Cingular will offer its "rollover" plan to AT&T Wireless customers who switch to Cingular. All new customers will be on Cingular plans.

AT&T Wireless's big business customers could use the deal as an excuse to switch carriers until the dust settles on the integration of the two companies, said Ken Hyers, a senior analyst with In-Stat/MDR, a research company based in Scottsdale, Ariz.

Hyers said he expects Cingular to improve its network substantially within 18 months, but the intervening period could be rocky.

Greg Teets, an analyst with A.G. Edwards & Sons in St. Louis, said, "Certainly this holiday season could be interesting if Verizon and Sprint step things up" in terms of advertising and competitive offers.

Customer turnover at AT&T Wireless has been high for the last few quarters, and Cingular will have to address that.

Cingular will begin to open AT&T Wireless's network to its own customers over the next few weeks, Ralph de la Vega, Cingular's chief operating officer, said in a telephone press conference.

De la Vega said Cingular's engineers began working on integrating the two networks once the deal was completed Tuesday morning.

The deal was announced in February. But the companies kept competing while federal regulators reviewed the proposal.

Cingular expects to begin delivering a "common service experience" to customers by Thanksgiving, said Nancy Garvey, vice president and general manager for the region that includes Missouri and Kansas.

Initially, however, the company will operate both AT&T Wireless and Cingular customer service centers. Customers will be routed to the appropriate center by entering their cell phone number.

Cingular expects to begin training AT&T Wireless personnel and taking stock of assets shortly, Garvey said. Exterior signs on stores may not change immediately, but Cingular will hang banners inside the stores and on the outside of AT&T Wireless locations where local authorities allow it, she said.

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(c) 2004, St. Louis Post-Dispatch. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

BLS, SBC, VZ, VOD,

Source: St. Louis Post-Dispatch

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