Cingular reaches deal with DOJ on AT&T Wireless takeover

IDG News Service - Cingular Wireless LLC will divest itself of wireless customers and other assets in 13 U.S. markets as a requirement for its $41 billion acquisition of AT&T Wireless Services Inc., according to a consent decree announced today by the company and the U.S. Department of Justice.
The DOJ contends that if the combined company did not divest itself of assets in 11 states, the acquisition would cause higher prices and less wireless innovation. The 11 states covered in the consent decree are Connecticut, Georgia, Kansas, Kentucky, Louisiana, Massachusetts, Missouri, Michigan, Oklahoma, Tennessee and Texas.
The DOJ's Antitrust Division filed a civil lawsuit Monday in U.S. District Court in Washington to block the proposed transaction. At the same time, the DOJ filed a proposed settlement that, if approved by the court, would resolve the DOJ's concerns.
A Cingular spokesman said the company is satisfied with the decree. "We feel like the DOJ did a thorough job in resolving the merger and the competitive effects of the merger," said Clay Owen, senior director of public relations at Cingular. "We knew that there'd be a chance that divestiture would be required."
Cingular officials continue to expect the transaction to close later this quarter. The company bid on AT&T Wireless in February. The combined entity will have licenses to operate wireless service in 49 states and will serve the top 100 U.S. metropolitan areas.
According to the DOJ complaint, Cingular Wireless and AT&T Wireless are two of six mobile wireless services providers with a national presence, and the proposed transaction would reduce competition for mobile wireless telecommunications services in 10 markets, and for mobile wireless broadband services in three additional markets.
In nine of those 10 wireless telecommunications services markets, Cingular and AT&T Wireless are, or hold interests in, the two largest incumbent wireless providers, and in all 10 markets the merged firm would be the largest, according to the DOJ. The merging companies are also two of a limited number of mobile wireless services providers that have launched or are likely to launch mobile wireless broadband services, the DOJ said.
Under the terms of the settlement, the merged company must divest AT&T Wireless' wireless services business, including spectrum and customer contracts, in Litchfield, Conn., Fulton, Ky., Oklahoma City and Ponca City, Okla., and Lufkin and Nacogdoches, Texas. In Connecticut, Kentucky and Texas, the merged company may retain some of AT&T Wireless' wireless spectrum.
The merged company must also divest minority equity interests in mobile wireless services providers in Atlanta, Topeka, Kan., Pittsfield, Mass., St.Joseph, Mo., and Shreveport and Monroe, La.
To resolve the DOJ's competitive concerns related to mobile wireless broadband services, the merged company must divest 10 MHz of contiguous PCS wireless spectrum in Detroit, Knoxville, Tenn., and Dallas/Forth Worth.
Cingular, based in Atlanta, was formed in 2000 and is jointly owned by SBC Communications Inc. and BellSouth Corp. The company has more than 24 million subscribers, and in 2003 earned revenues of approximately $15.5 billion.