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Cingular Wireless LLC on Tuesday announced plans to buy AT&T Wireless, following years of rumors and an 11th-hour bidding battle with Vodafone Group.
Cingular, a joint venture between SBC Communications Inc. and BellSouth Corp., will pay some $41 billion in an all-cash deal that is expected to close by years end if shareholders and federal regulators approve it. The new company will retain Cingulars name and its Atlanta headquarters, as well as its current CEO, Stan Sigman.
If the merger happens it will create the largest wireless carrier in the United States, surpassing Verizon Wireless. If the merger happened today, the combined company would have 46 million customers and annual revenues exceeding $32 billion, as well as coverage in 97 of the top 100 markets.
“This new company is going to put others in the rearview mirror,” said John Zeglis, CEO of AT&T Wireless, in Redmond, Wash., speaking today at a press conference to announce the deal. “Hey Verizon, can you hear us now?”
Tough talk aside, Zeglis plans to leave the company when the merger is complete.
“One desk, one salary for the CEO,” he said. “Ill only stay for whatever transition help that Stan might ask me for.”
In justifying the massive purchase, Cingular officials gave the same reasons that analysts have given for several speculative months.
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“Cingulars strength is in the consumer market,” Sigman said. “AT&T Wireless is strong in the business market.”
Sigman added that Cingular could use the additional spectrum, and said that merging the two companies will be technically sensible because both run GSM (global system for mobile communications) networks.
“Any way you look at it, this combination makes sense for our companies and for our customers,” Sigman said.
Cingular has been historically weak on next-generation data services. When confronted about a lack of enterprise services in the past, Cingular officials would point to Mobitex, the companys long-standing and reliable data-only network. But the company has been slow to build out its next-generation GPRS (General Packet Radio Service) voice and data network, an area where AT&T Wireless has been stronger. On the other hand, some current AT&T Wireless customers also use Mobitex, which runs older models of Research in Motion Ltd.s BlackBerry pages, which are popular with enterprise customers. (All of RIMs latest models support both voice and data on newer networks, including AT&Ts.)
“Actually, this will be good for us,” said John Halamka, CIO of Caregroup Health Systems, a Boston-area hospital network. “We use Cingular for many of the older Blackberries, and our previous cellular provider was Cingular, so many employees still have accounts with them.”