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Cingular, AT&T Wireless in Merger Talks

Discussion in 'Western US Wireless Forum' started by josh, Apr 15, 2002.

  1. josh

    josh New Member

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    Cingular, AT&T Wireless in Merger Talks

    Redmond, Washington, April 15 (Bloomberg) -- AT&T Wireless Services Inc., the third-largest U.S. mobile-phone
    carrier, is in merger talks with larger rival Cingular Wireless, people familiar with the companies said.
    Talks are preliminary and no transaction is imminent, they said. SBC Communications Inc. owns 60 percent of Cingular, and BellSouth Corp. owns 40 percent. They share management control.

    U.S. wireless companies are expected to add customers at the slowest rate ever this year, which may spur consolidation as carriers try to cut expenses, analysts said. AT&T Wireless, with a market value of $22 billion, and Cingular, the second-biggest U.S. cellular provider, would pare costs by operating a larger network and eliminating duplication of sales and marketing.

    ``Cingular will be a prime candidate looking to merge with someone who has a complementary set of assets,'' said Bryan Krause, an analyst at State Street Research & Management Co., the owner of 252,380 BellSouth shares and 2.36 million SBC shares as of December.

    Spokesmen for Cingular, AT&T Wireless, SBC and BellSouth declined to comment.
    Together, AT&T Wireless and Cingular would be able to save money by purchasing equipment in larger quantities, said Prudential Securities Inc. analyst Chris Larsen, who rates AT&T Wireless ``hold'' and doesn't own the shares. Both companies use the same network technologies.
    The combined company would spend less on advertising and promotion, with one brand instead of two, Larsen said.

    Shares of Redmond, Washington-based AT&T Wireless rose 56 cents, or 7.4 percent, to $8.18 on Friday. They've dropped 59 percent in the past year, and are valued at less than a third of their April 2000 initial public offering price. Cingular doesn't have publicly traded shares, making a combination ``challenging from a structural standpoint,'' Krause said.

    Shares of San Antonio-based SBC rose 25 cents to $34 Friday, while Atlanta-based BellSouth climbed 63 cents to $32.08.

    Japan's NTT DoCoMo Inc. owns about 16 percent of AT&T Wireless. The company's shares rose 4,000 yen, or 1.3 percent, to 320,000 in Tokyo. DoCoMo hasn't heard of any talks, spokesman Takumi Suzuki said.

    ``Our stance on AT&T Wireless remains the same,'' Suzuki said. ``It is the most important operating base for us to do business in North America.''

    Falling Prices
    Six U.S. wireless companies, including AT&T Wireless and Cingular, operate nationwide or in large parts of the country. Per- minute calling prices have declined 13 percent in the past six months as they vie for customers, according to market researcher ARS Inc.
    Customer growth is expected to be as low as 13 percent this year, down from 18 percent in 2001, Larsen said. Mergers would help reduce price-cutting and customer defections by lowering the number of competitors, he and other analysts said.

    AT&T Wireless and Cingular in January agreed to share the cost of building a network along 3,000 miles of highway in the U.S. Midwest and West. The venture, a test of how the companies work together, might presage a merger, analysts said at the time.
    Aside from joining forces on network construction, wireless companies are cutting costs by firing employees or not adding workers. Sprint Corp.'s PCS Group said in February it would eliminate 3,000 jobs and close five customer-service centers.

    Regulations Lifted
    In January 2003, federal rules limiting the amount of airwaves each company may control in a single market will be lifted, paving the way for combinations among wireless companies that use the same technology, analysts say.

    Verizon Wireless Inc., a venture of Verizon Communications Inc. and Vodafone Group Plc, is the largest U.S. mobile-phone company, with 29.4 million customers as of Dec. 31. Cingular has 21.6 million subscribers, followed by AT&T Wireless with 18 million. Verizon Wireless operates a different type of network than Cingular and AT&T Wireless.

    AT&T Wireless began talking to Cingular after discussions stalled with Deutsche Telekom AG's VoiceStream Wireless Corp., the people familiar said. VoiceStream spokeswoman Kim Thompson declined to comment.
    VoiceStream uses the global system for mobile communications, or GSM, technology that AT&T Wireless and Cingular are installing. Currently, AT&T Wireless and Cingular use time-division multiple- access, or TDMA, technology in some markets, and GSM in others
     
  2. KevinJames

    KevinJames WA's 1st retired mod
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    Josh, what is the source of this article? Part way into the article it says

    << Spokesmen for Cingular, AT&T Wireless, SBC and BellSouth declined to comment. >>

    so who is making this claim?
     
  3. josh

    josh New Member

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    Hey KEV,

    This was on the front page of the Seattle Times this morning and it was emailed to me numerous times by managment as a interesting article!!

    JOSH
     
  4. KevinJames

    KevinJames WA's 1st retired mod
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    Scarry! I cringe at the thought of ATT Wireless merging with Cingular. Cingular's all-around service is not near what ATT's is. And having already seen what SBC did to PacBell, that worries me even more.

    Then again, looking on the positive side, the resulting company would become NUMBER ONE and Verizon could go suck eggs. [​IMG]
     
  5. josh

    josh New Member

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    I Agree with you Kev. Here is another part of that article that makes it sound a little better.

    Benefits of consolidation
    Observers say that eliminating a few competitors through mergers would stem the loss of subscribers.
    "What you have to do is close the back door," Kagan says. "They've got plenty of customers coming in the front door, but they're losing business as fast as they're gaining it."
    Merging with another company could also help a carrier lower the cost of upgrading its network and fill in holes in its coverage.
    Carriers are establishing new technologies that go beyond voice traffic and its diminishing per-user revenue. That upgrade will offer higher speeds for transmitting data wirelessly, commonly referred to as 2.5G, for 2.5 generation technology.
    Such an undertaking is extremely expensive. AT&T Wireless plans to spend more than $5 billion upgrading its network this year. Many carriers are planning complete overhauls in the next five years in order to offer data services at broadband speeds, often called 3G, for third generation.
    Observers say carriers will have to consolidate in order to roll out 3G services since many of them are constrained by the limited availability of "spectrum," the airwaves they license from the government to run service on. The FCC isn't expected to make new spectrum available until 2006. It's also expected to lift restrictions at the end of the year on how much spectrum a carrier can own in a certain market, which may open a door to potential mergers.
    VoiceStream's Stanton says if that happens, companies that use the same technological platform are the most likely to merge.
    VoiceStream, AT&T Wireless and Cingular Wireless all use a platform called global standard for mobile communications, or GSM. Verizon Wireless and Sprint PCS use a technology called code division multiple access, or CDMA, which is incompatible with GSM.
    The third technology alternative is Nextel, which uses an incompatible technology called integrated digital-enhanced network, or iDEN.
    "It's like a high-school dance," Stanton said. "Everyone's standing around, but nobody knows who's going to pair up with who. The earliest (carriers) will talk is summer, fall."
     
  6. KevinJames

    KevinJames WA's 1st retired mod
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  7. ComicalMoodyDan

    ComicalMoodyDan Gold Senior Member
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    That link really doesn't talk about the merger possiblites of AT&T and Cingular. See my link in the news forum for one that gets into more details about the AT&T/Cingular issue.
     
  8. Dukedog

    Dukedog Senior Member
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    Cingular and AT&T, Wow! Kevin, if that happens I know you might sign up with Sprint. lol
     
  9. ILUVSOCAL

    ILUVSOCAL Banned
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    How about Atingular for a name, lol
     
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  10. KevinJames

    KevinJames WA's 1st retired mod
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    How about Death Star? (No, no too obvious, too dark, too omenous.)

    How about we decapatate the Cingular X-guy (you know, the little orange X with the dot at top), and then change mLife to XLife. (No, sounds too much like divorce or XFiles.)

    How about WorldCom (opps, already taken).

    m-Cing? (No, sounds like that boy-group NSync that nobody likes)

    WARM -- Wirelessly Armed Roaming Masses
    (Hey, I could warm up to that!)
     
  11. aiwapro

    aiwapro Silver Senior Member
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    I don't see how the merger would make them number one, when both of their GSM networks together don't equal Voicestream's, maybe they will have a little bit more at the time of the merger, but not much. Voicestream is growing rapidly. They have the east part of the US well covered, with some spots to fill in, but are now extending westward more. The Voicestream Nationwide Coverage Map represents what I have said very well.
    Here is what AT&T has to offer as far as GSM. Look at this AT&T GSM Coverage Map
    I couldn't find a Cingular GSM map, but beleive me, it is extremely limited. Cingular is doing too much, too fast; They released today that they are going to go ahead and try to head towards GPRS. They don't even have their GSM coverage in enough places to upgrade to GPRS. They said that as of today, their GPRS service is now available in California & Reno, Nevada. Hmmm, that is just because Voicestream will be their in a couple of months and they don't want Voicestream to use GPRS as a marketing advantage towards them, since Voicestream already has it. It still doesn't matter though, Voicestream has GPRS service everywhere that they have coverage, Cingular only has it in California and Reno, Nevada. Cingular said that it will take them until 2004 before they have GPRS coverage across their entire network. They are way behind Voicestream. By that time, Voicestream will have their EDGE installed across most of their network.
    That's probably why Voicestream would not merge with them, Cingular has nothing to offer.
     
  12. aiwapro

    aiwapro Silver Senior Member
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    Ok this is official. Voicestream will begin deploying EDGE later this year and into 2003.
     
  13. Dukedog

    Dukedog Senior Member
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    Yeah Right, at VoiceScream we don't hear on our phones until your Voice Scream. Huh, can you hear me now, what I can't hear you.
     
  14. aiwapro

    aiwapro Silver Senior Member
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    What in the world are you talking about.

    If you are talking about sound clarity on their phone, that is definately not a problem with Voicestream. They may other problems in some areas, but I have never heard that. I think that you are making that up. Voicestream call clearity is way, way, way, way better than that Cingular that you have.
     
  15. Dukedog

    Dukedog Senior Member
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    You think it is better, but you don't know if it better. I know which is better for the Dallas market, and guess what it not your company.lol
     
  16. ILUVSOCAL

    ILUVSOCAL Banned
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    In this corner, Tmobile, and in the other corner, Dukedog. It's gonna be a long, nasty bout folks [​IMG]
     
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  17. aiwapro

    aiwapro Silver Senior Member
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    I admit Voicestream has problems in some markets as I have heard, but I have not heard that the call clearity is not good.
     
  18. erub

    erub Junior Member
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    all I know, is that in Dallas, none of my friends have Voicestream. Cingular & Sprint are the most popular here, and a few have AT&T. Sorry [​IMG]
     
  19. larry

    larry Sprint loyalist and former mod
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    Sprint won the JD Powers award in Dallas in 1999 and 2000 so they should still be among the best there. Maybe they can reclaim their award in 2002??
     
  20. Dukedog

    Dukedog Senior Member
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    Well you know what aiwapro, there alot you have not heard about your lovely VoiceStream.lol
     
  21. IdiOTeQnoLogY

    IdiOTeQnoLogY Bronze Senior Member
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    look dukedog; ive come to accept that within the next 3 years everyone will be on voicestream so we might as well face it;

    several voicestream users have announced a sort of grassroots "door to door" method. by selling reeses peanut butter cups in a similar fashion to PTA fund raisers.

    they will raise enough money to buy the big 4 US carriers and consolidate into a company called plain ol VOICESTREAM--or ELSE inc.; aiwapro will be CEO.
     
  22. Dukedog

    Dukedog Senior Member
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    Ha, that's funny, keep hope alive.
     
  23. Rich

    Rich Bronze Senior Member
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    Voicestream will be assimilated....[​IMG]
     
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  24. Jack

    Jack Silver Senior Member
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    I think that voicestream will go far

    Jack
     
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  25. aiwapro

    aiwapro Silver Senior Member
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    I hope that would happen IdiotQnology. Then I could come back here and say "I told you so." Well at least you will always have an inside person, in this case, very inside.
     

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