Subject: [NEXTEL-1] AT&T Wireless Bids Rise to $35 Billion, NYT and Telegraph Say

From: [email-masked]
Date: Sun, 15 Feb 2004 18:37:51 -0500

AT&T Wireless Bids Rise to $35 Billion, NYT and Telegraph Say 
Feb. 15 (Bloomberg) -- AT&T Wireless Services Inc. received offers 
worth $35 billion on Friday as bidding intensifies for the third-
largest U.S. mobile carrier, according to reports from the New York 
Times and the U.K.'s Sunday Telegraph. 

Vodafone Group Plc offered about $13 a share, or $35 billion, for 
AT&T Wireless, the Telegraph said, without citing anyone. Cingular 
Wireless LLC also bid $35 billion, raising its offer from $30 
billion, or $11 a share, the New York Times said yesterday, citing 
unidentified people close to the auction. Cingular is owned by SBC 
Communications Inc. and BellSouth Corp. 

AT&T Wireless, which added fewer subscribers than rivals last 
quarter, put itself up for sale last month. SBC and BellSouth want 
to merge AT&T Wireless with Cingular to form the biggest U.S. 
wireless carrier and be a stronger competitor to Verizon Wireless in 
the $80 billion-a-year U.S. market. Vodafone, whose U.S. presence is 
its 45 percent of Verizon Wireless, would be able to establish its 
own brand there. 

``It seems Cingular has the most to benefit, so they should have 
more to spend on it than anyone else,'' said Dean Gekas, an analyst 
at State Street Corp., citing the company's ability to eliminate 
overlapping costs. The price tag is not likely to be much higher 
than $35 billion, said Gekas, whose firm owned 70.2 million AT&T 
Wireless shares in December. 

Vodafone spokesman Ben Padovan declined to comment on the Telegraph 
report. Vodafone Chief Executive Arun Sarin received approval from 
the Newbury, England-based company's directors to make a cash and 
share offer for AT&T Wireless, the Guardian newspaper reported 
yesterday, without citing anyone. 

Offer Raised 

An offer of $13 a share for Redmond, Washington-based AT&T Wireless 
would be 10 percent more than Friday's close of $11.82. Shares of 
AT&T Wireless rose 6.5 percent last week in anticipation bids would 
exceed $11 a share. 

SBC and BellSouth raised their $30 billion, or $11 a share, offer 
for AT&T Wireless, a person familiar with the matter told Bloomberg 
News yesterday. Clay Owen, a spokesman for Atlanta- based Cingular, 
declined to comment, as did SBC spokesman Larry Solomon. BellSouth 
spokesman Jeff Battcher didn't return calls. 

The board of Redmond, Washington-based AT&T Wireless planned to meet 
yesterday to discuss Cingular's offer and any other bids it may have 
received, people who requested anonymity have said. 

Vodafone, the world's biggest mobile operator, and Nextel 
Communications Inc. also have expressed an interest in bidding, 
people who declined to be named have said. 

No NTT Bid 

NTT DoCoMo Inc. of Japan, AT&T Wireless's biggest shareholder, with 
a 16 percent stake, decided not to bid, according to the Nihon 
Keizai newspaper. It will consider whether to retain or sell a stake 
later, the paper said. Mariko Hanaoka, a DoCoMo spokeswoman, 
declined to comment. 

AT&T Wireless had told bidders it would make a final decision by the 
end of the month, people familiar with the sale have said. 

AT&T Wireless needs a partner to compete with bigger and more 
profitable rivals such as Verizon Wireless, which is 55 percent 
owned by Verizon Communications Inc. and 45 percent owned by 
Vodafone. 

A combination of Cingular and AT&T Wireless would create a company 
with 46 million customers, compared with Verizon Wireless's 37.5 
million. It would remove a competitor from the U.S. wireless market, 
reducing the pressure to give away minutes or slash prices on phones 
to woo customers, analysts have said. 

Cingular Savings 

SBC and BellSouth could save as much as $1.2 billion a year by 
reducing capital spending and other expenses at the enlarged 
company, Lehman Brothers Holdings Inc. analyst Blake Bath said in a 
research note. 

BellSouth, SBC and Cingular could finance a merger using their 
combined $10.5 billion in cash as well as AT&T Wireless's $4.3 
billion in cash at year's end. 

Additional funding could also come from the $8.2 billion that the 
four companies are expected to generate this year in free cash flow, 
which is cash from operations that's left over after spending on 
equipment, Merrill Lynch analysts said in a recent research note. 
SBC and BellSouth also may need to issue more than $6 billion in 
debt, Merrill said. 

Vodafone could use ownership of AT&T Wireless to establish its brand 
in the U.S. and develop services across a wider region. To clinch 
the purchase, Vodafone needs to reach an agreement to sell its 45 
percent stake in Verizon Wireless to Verizon Communications Inc. 

Verizon Exit? 

Vodafone had been talking to Verizon about a possible exit from 
Verizon Wireless, people familiar with the matter said last week. 
The sale of the stake, which analysts said may be worth more than 
$20 billion, could help fund an offer. 

AT&T Wireless would give Vodafone a carrier that relies on the same 
cellular technology that it uses: the Global System for Mobile 
communications, or GSM. The match may help Vodafone negotiate 
savings on bulk orders for handsets and other equipment. Verizon 
Wireless's technology is incompatible with GSM. 

AT&T Wireless, which had 22 million customers at the end of 2003, 
put itself up for sale last month after a fourth-quarter loss and 
the slowest quarterly sales gain -- 4.1 percent -- since it was spun 
off from AT&T Corp. in 2001. The company added 128,000 subscribers 
in the December quarter, the lowest of among U.S. wireless carriers. 

AT&T Wireless's difficulty in inducing people to purchase more 
expensive services intensified in the fourth quarter when a software 
problem kept it from moving some customers onto its upgraded 
network.

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