AT&T Wireless is for sale

[Boo]

Taken from the New York Times:

The worst-kept secret in the telecommunications industry is now out in the open: AT&T Wireless is for sale.
The board of AT&T Wireless authorized the company yesterday to entertain offers after receiving overtures from nearly a half-dozen suitors, including Cingular, Nextel Communications, Vodafone, NTT DoCoMo and others, executives close to the company said. The move by AT&T Wireless and its potential buyers indicates that one of the nation's most fiercely competitive industries is heading toward a long-awaited consolidation that may be the tip of a multilayered and complex merger process around the world.
   
   
AT&T Wireless has retained Merrill Lynch & Company, the investment bank, to assist in evaluating offers, the executives said.
AT&T Wireless, whose shares until recently had declined almost steadily since its first public stock offering in 2000, has been plagued by customer defections in recent years as other carriers gained reputations for more reliable service. Next week, AT&T will report its fourth-quarter earnings, and investors will be able to see for the first time the result of federal rules that went into effect in November, allowing customers to take their phone numbers with them when they change providers. Many analysts suggest AT&T Wireless may have fared the most poorly in the industry and expect the company to report weak earnings.
AT&T Wireless was considering yesterday whether to make a public disclosure of the auction, which is likely to be described as "exploring strategic alternatives," this week or to wait to make the announcement next week in conjunction with the earnings report, the executives said. If AT&T Wireless is acquired, it will be a marked turn of events for the company, which during the mid-1990's was the nation's dominant wireless carrier.
The suitor with the inside track appears to be Cingular, a joint venture between the BellSouth Corporation and SBC Communications, which has been in talks off and on with AT&T Wireless for years, though it has yet to make a formal offer, according to executives close to AT&T Wireless. In a letter expressing its interest, Cingular suggested it would be willing to pay about $11 a share in cash, or about $30 billion, according to the executives. Shares of AT&T Wireless rose 40 cents, to $10.39.
A deal between Cingular, which has about 23.4 million customers, and AT&T Wireless, with about 21.9 million customers, would create the nation's largest mobile phone company.
Indeed, Cingular may be the most interested buyer because it has relatively little radio spectrum in large markets, compared with the major phone carriers in the top markets. This limits the number of people it can have on its network and limits its capacity to expand a network to carry data like e-mail transmissions. In addition, Cingular is eager to have AT&T Wireless's strong foothold in the corporate market.
Still, the executives also said that Nextel, whose stock has doubled over the last year and could be used as currency in any transaction, was also a serious and credible bidder. Vodafone, the largest wireless carrier in the world, and NTT DoCoMo, a Japanese company that owns 17 percent of AT&T Wireless, have also expressed interest, but a bid by either would be much more complex. Other potential suitors that could enter the fray are T-Mobile, the wireless company controlled by Deutsche Telekom, and even AT&T, which is also considering a possible bid, executives close to the company said.
Indeed, the fates of AT&T and AT&T Wireless are somewhat intertwined. When AT&T spun off the wireless company, it granted the new company a license to use the AT&T name and logo. AT&T, however, has the option to terminate the license if AT&T Wireless is taken over.
The move by AT&T Wireless to begin evaluating bids only hints at the tactical maneuvering by mobile phone carriers hoping to become large enough to survive the coming shakeout and to deal with complicated technological issues.
Underscoring the complexity is the interest expressed by Vodafone, which owns 45 percent of Verizon Wireless, the nation's largest mobile phone company, in a joint venture with Verizon Communications.
Vodafone runs its European network using a standard called G.S.M., or global system for mobile, while Verizon Wireless runs its network on an alternative standard called C.D.M.A., or code division multiple access. From a technological standpoint, this could make it difficult for Vodafone to combine the networks.
If Vodafone were to bid on AT&T Wireless, which is a G.S.M. network, it would have to divest itself of its stake in Verizon Wireless, most likely by selling it to Verizon. Investment bankers and consultants who focus on the telecommunications industry said Vodafone was prepared to do just that.
But "it would take some time," said Raul L. Katz, director of the telecommunications practice for Booz Allen Hamilton. He added that such a move would be highly welcome by Verizon, which is based in New York, because it would then gain complete control of Verizon Wireless. "Verizon is very happy."
Patrick Comack, an analyst with Guzman & Company, an investment banking firm, said that Vodafone was expected to take a serious interest in AT&T Wireless, and that could lead to a price war with Cingular.
"Vodafone is going to attack, and that's what gets this thing really hairy," Mr. Comack said. "They want a seamless global network."
Another possibility being discussed by investment bankers is that Cingular may have a second end in mind with its public expressions of interest in AT&T Wireless. The company might also be interested in buying T-Mobile. Cingular's public bid for AT&T Wireless could have the effect of driving down the price of T-Mobile, Mr. Comack said.
   
   
The maneuvering for AT&T Wireless comes after federal rules that went into effect on Nov. 24 allowing customers to take their phone numbers with them when they change providers. Industry analysts predicted that the portability rules would inspire millions of customers to swap providers in search of better call quality and customer service.
The individual carriers have yet to disclose how many customers they have added or lost since the rules went into effect, asserting that they will provide details in the coming months when they release quarterly earnings. But industry analysts say that the number of customers who decided to switch providers is far lower than originally expected. Roger Entner of the Yankee Group, a market research firm, said about a million mobile phone customers had switched providers.
Still, Mr. Entner and other industry experts said they thought the psychological toll of portability had played a role in the timing of AT&T Wireless's decision to consider takeover offers.
"For AT&T, portability was a public relations disaster," Mr. Entner said. "They got really roughed up."
Mr. Entner said that AT&T Wireless had other recent struggles, including difficulties in activating new customers and in deploying its data network. But Mr. Entner said that AT&T Wireless was fundamentally sound.
"This is a buyout dream come true," Mr. Entner said. "It's fundamentally a good company, but things have not been executed well in the past. They've had service issues, activation issues and data issues that could have been easily avoided."
Mr. Katz of Booz Allen Hamilton said he thought that number portability was only part of what was spurring consolidation. "Portability could have been the trigger," he said, but "structurally this thing was untenable."

[Nastrodamus]

Man the saltness continues....

Look what happen to AT&T, and to believe they had just gone through a couple of deals with the Jamaican Government.

Not say that we caused it...but sure is coincidental.