Dust settles on AT&T Wireless battle
Vodafone outflanked by Cingular Wireless
Cingular has won the battle for AT&T Wireless with a $41bn bid.
A day and night of high drama was brought to a close after Vodafone withdrew from the battle for AT&T Wireless after being outflanked by Cingular Wireless. Cingular stands to make some significant synergies with the number-three US wireless operator, while Vodafone is left without a branded presence in the world's biggest market.
Cingular's bid is still subject to the approval of AT&T Wireless shareholders and US regulatory authorities, and is expected to be completed in Q4 2004.
Cingular president and CEO Stan Sigman confirmed that the deal should see many synergies between the two operators, with cost savings of $1bn in 2005, and $2bn annually from 2007, which he believed to be a conservative estimate.
The combined company will have 46 million customers in 49 states, and would cover 97 of the nation's top 100 markets. The combined 2003 annual revenues of the two companies are in excess of $32bn.
So what now for Vodafone? Many industry analysts agree that Vodafone needs to resolve its US position, where it has an invisible but profitable presence with its 45 per cent stake in Verizon Wireless.
Others have speculated that the failure in the US will trigger Vodafone to seek to resolve its remaining European problem market, namely France, where it has a minority stake in France's second largest mobile phone operator SFR, which is owned by Cegetel, which is in turn owned by the media giant Vivendi Universal.
On news that Vodafone was exiting the bidding process for AT&T Wireless, shares in Vivendi Universal immediately jumped 5.5 per cent, as investors speculated that it could now be a bid target for Vodafone.
The repercussion of the deal on the US wireless market remain uncertain. With the number of operators set to be reduced to five, and with Vodafone still without a credible presence in the world's most valuable market, it remains to be seen how long the world's largest mobile operator will be content to put up with the status quo at its US operation.
Whatever happens, Cingular will have its work cut out over the coming months to turn around the decline at AT&T Wireless; leaked figures have revealed that AT&T Wireless lost 4 per cent of its customers in January, and ARPU figures were down 10 per cent.