Regulators Let Cingular Buy AT&T Wireless
Merger Will Create Biggest U.S. Cell Firm
Saturday, October 23, 2004; Page E01
The $41 billion merger between Cingular Wireless LLC and AT&T Wireless Services Inc. won approval from the Federal Communications Commission yesterday, according to federal sources close to the agency, paving the way for major changes in the lucrative cell phone market.
Cingular's purchase of AT&T Wireless will give the company about 47.6 million customers -- roughly 27 percent of the nation's wireless market and enough for it to surpass Verizon Wireless as the nation's largest cellular provider. It will serve all of the top 100 markets in the United States.
To satisfy the antitrust concerns of regulators, Cingular will have to sell AT&T Wireless's business, including stores and customers, in 16 mostly rural and suburban markets, according to the sources. The company also will be ineligible to buy additional airwave licenses in areas where the combined company controls 70 megahertz or more of spectrum; 189 megahertz is the total available for use by cell phone companies in a market. Additionally, the company will have to sell a portion of its airwave licenses in some other markets.
Spokesmen for Atlanta-based Cingular, Redmond, Wash.-based AT&T Wireless, the FCC and the Justice Department declined to comment on the pending merger.
Company officials and some analysts say the combined resources of size and marketing power could mean cheaper phone bills, new high-speed services and better network coverage for Cingular and AT&T Wireless customers. Cingular, along with its two parent companies -- SBC Communications Inc. and BellSouth Corp. -- also could step up its marketing of bundled packages of local, long-distance, and wireless service.
After an eight-month approval process, Cingular faces the two-year task of integrating the companies' networks, which are built from a hodgepodge of technologies. It must clean up AT&T Wireless's tarnished image, and it must market itself effectively to keep customers from defecting to other carriers looking to take advantage of any missteps.
The combined company will employ about 70,000 people. Although it may lay off thousands of workers, Cingular said it will not make cuts until next year. The AT&T Wireless brand name will be transferred back to its former parent, AT&T Corp., six months after the deal closes.