Cingular completes AT&T Wireless acquisition

The move creates the nation's largest wireless carrier

Cingular Wireless LLC announced today that it has completed a $41 billion acquisition of AT&T Wireless Services Inc., creating the nation's largest wireless carrier, following approval from two U.S. government agencies.

The merged company will have 46 million customers, compared to about 40 million for Verizon Wireless.

Cingular officials said work immediately started on integrating the services of the two companies. The two companies' wireless networks will open up to each other immediately, creating expanded coverage for customers, said Stan Sigman, president and CEO of Cingular. Sigman called the merger a "new day" for wireless customers.

The merged company will begin marketing wireless service under the Cingular brand by late November.

Officials in the merged company, which now has about 68,000 employees, said they expect to lay off some staff, although not until 2005. Cingular officials haven't determined how many people will stay at AT&T Wireless' Redmond, Wash., headquarters. "I believe there are a lot of talented people in Redmond," Sigman said.

The company's announcement came the same day as a U.S. Federal Communications Commission decision to approve the acquisition on the condition that the merged company take action to ensure competition in 22 U.S. markets.

The FCC's approval required the merged company to divest itself of customers and other wireless assets in 16 markets, and to divest itself of spectrum in two major markets, Detroit and Dallas. In four other markets, the FCC will require Cingular to convert to passive interests some nonpassive, minority equity interests of AT&T Wireless in competing mobile telephony carriers.

The FCC also required the companies to appoint a management trustee to serve as manager of the divestiture assets until they are sold to third-party purchasers or transferred to a divestiture trustee.

The FCC's approval of the acquisition followed an announcement from the U.S. Department of Justice that it will require the merged company to divest itself of wireless customers and other assets in 13 U.S. markets (see story).

Cingular, after successfully bidding for AT&T Wireless in February, took the position that no divestiture of assets would be needed to provide consumers competitive wireless services.

Sigman declined to comment on the FCC decision, but he noted that the FCC and DOJ reviews included 40 million pieces of paper. "The Justice Department and the FCC did a very thorough and deep dive on all these issues," he said.

Sigman will continue to serve as the president and CEO of the merged company, and Ralph de la Vega will continue as chief operating officer.

Cingular, based in Atlanta, was formed in 2000 and is jointly owned by SBC Communications Inc. and BellSouth Corp. Cingular had more than 24 million subscribers before the merger, and in 2003 earned revenue of approximately $15.5 billion.

Copyright © 2004 IDG Communications, Inc.

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