Cingular Approved to Buy AT&T Wireless

Cingular Wireless LLC won approval from American antitrust officials for its $41 billion purchase of AT&T Wireless Services Inc. on the condition the companies sell airwaves and give up customers in some cities.The Justice Department will require Cingular to sell part of the combined company’s operations in 13 markets, the agency said in a statement. Cingular agreed to the conditions, spokeswoman Jennifer Bowcock said.Clearance from the Justice Department and Federal Communications Commission will let Atlanta-based Cingular create the biggest American mobile-phone operator with 47.6 million customers, surpassing Verizon Wireless. Cingular’s chief executive, Stan Sigman, who expects to close the transaction by year’s end, now faces the uphill task of keeping customers while combining operations, said Tim Gilbert at Principal Global Investors.“It will probably take a full year for them to get their full marketing machine humming,” said Mr. Gilbert, whose Des Moines, Iowa-based firm manages $122 billion, including debt issued by Cingular’s parents, SBC Communications Inc. and BellSouth Corp. “It’s not going to be an easy road. You’re doubling your size. You face integration risks.”The FCC approved the purchase on October 22 with some of the same and additional conditions, people familiar with the matter said. The agency may announce its approval today.Shares of Redmond, Wash.-based AT&T Wireless rose 12 cents to $14.92 at 4 p.m. in New York Stock Exchange composite trading. That’s the closest the shares have been to the $15 price Cingular agreed to pay since the merger was announced in February.Shares of San Antonio-based SBC, which owns 60% of Cingular, fell 25 cents to $24.99. Atlanta-based Bell-South, which owns the rest, lost 13 cents to $26.42.Under the Justice Department agreement, the combined company must sell capacity for sending calls in Dallas, Detroit, and Knoxville, Tenn. In each place, the enlarged company will be required to sell 10 megahertz of airwaves, which equals about 5% of the total available in each market.In 10 other markets, where Cingular and AT &T Wireless are already the two largest operators or hold stakes in the biggest carriers, the combined company will be required to sell AT &T Wire less airwaves and customers or stakes in local providers. Those areas include Oklahoma City and Ponca City, Okla.; Litchfield, Conn.; and Fulton, Ky.BellSouth’s chief financial officer, Ronald Dykes, said he expects the acquisition of AT &T Wireless to close within a day or two of the announcement of government approval and for integration to begin immediately afterward.“Integration starts to occur the minute the order is signed, and we believe we’re on the fast track to deliver that integration” to customers in a week or two after the transaction is completed, Mr. Dykes said on a conference call with analysts. Full integration will take “several quarters,” he said.Since the companies announced the deal in February, analysts had expected the government to approve it under the condition Cingular and AT&T Wireless sell properties in some markets. Advocacy groups Consumers Union and the Consumer Federation of America asked the FCC to block the acquisition, saying it would lead to higher prices and a decline in service.Verizon Wireless, partly owned by Verizon Communications Inc., is the largest American mobile-phone operator by sales and subscribers.Cingular, now the second-largest American mobile-telephone company, last week said third-quarter sales rose 4.9% to $4.26 billion as the company won more subscribers. Profit fell 18% to $145 million.AT&T Wireless’s third-quarter profit declined 25% as the company spent more to keep and win back customers. Sales fell 3.7% to $4.21 billion. The company added 170,000 subscribers.BellSouth said yesterday that third quarter profit fell 15% to $799 million as hurricane damage boosted costs and subscribers disconnected lines. Sales fell less than 1% to $5.1 billion.SBC’s chief executive, Ed Whitacre, said this month that Cingular’s customer losses may rise after the purchase of AT&T Wireless. Churn, or the average monthly percentage of mobile phone subscribers who disconnect, “will increase slightly over the next couple months,” Mr. Whitacre said at a Goldman Sachs Group Inc. investor conference in New York. He didn’t say how much it may rise.Competing wireless carriers may poach “tens of thousands” of customers as Atlanta-based Cingular integrates operations with AT&T Wireless, Mr. Whitacre said in a October 5 interview.

Cingular Approved to Buy AT&T Wireless

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