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Cingular to Acquire AT&T Wireless
Posted: 17-Feb-2004 [Source: Cingular]

[Cingular to pay AT&T Wireless shareholders approximately $41 billion or $15 cash per common share.]

Atlanta -- Cingular Wireless LLC, a joint venture between SBC Communications Inc. and BellSouth Corp., announced today an agreement to acquire AT&T Wireless, creating the premier wireless carrier in the United States. Today, the combined company would have 46 million customers and one of the most advanced digital networks in the U.S., with spectrum in 49 states and coverage in 97 of the top 100 markets. The combined 2003 annual revenues of the two companies would have exceeded $32 billion.

Under the terms of the agreement approved by the boards of directors of Cingular and AT&T Wireless, shareholders of AT&T Wireless will receive $15 cash per common share or approximately $41 billion. The acquisition, which is subject to the approvals of AT&T Wireless shareholders and federal regulatory authorities, and to other customary closing conditions, is expected to be completed as soon as late 2004.

Customers of the new company will have access to the largest GSM network in the United States. GSM is the world's most widely used wireless technology with nearly one billion customers in more than 200 nations. Because both companies use the same technology, the network integration will bring customers almost immediate improvement in coverage and call quality. Cingular customers also will have the widest choice of handsets and devices in the industry.

Because of improved spectrum holdings, the new company should be able to accelerate its offering of advanced wireless data services and pave the way for high-speed third generation services in the future. This is important because consumers and businesses are increasingly relying on wireless internet and e-mail access. Cingular and AT&T Wireless have been leaders in rolling out high-speed wireless data offerings, including GPRS (General Packet Radio Services), EDGE (Enhanced Data rates for GSM Evolution) and trialing next generation UMTS (Universal Mobile Telecommunications System).

In addition, the new combined company will be well positioned to deliver unmatched services for business customers, including high-speed wireless connectivity for PCs and wireless e-mail devices for mobile executives.

Cingular expects to achieve significant operating synergies through this acquisition by consolidating networks, distribution, billing, procurement, marketing, advertising and other functions. The company expects to generate more than $1 billion in operating expense and capital expenditure savings in 2006, and in excess of $2 billion in annual savings beginning in 2007.

Cingular has a solid track record of successfully integrating companies," said Sigman. "Three years ago, we created Cingular by combining two of the strongest regional wireless companies in the United States. We also created one of the best-known and most recognizable brands in America. Now, we have the opportunity to use our combined resources to provide wireless users with services that are second-to-none."

The boards of Cingular and AT&T Wireless have approved the merger agreement. SBC Communications and BellSouth have committed funding to Cingular for the all cash deal. Funding requirements for SBC will be approximately $25 billion and for BellSouth, approximately $16 billion. Cingular expects the combined operations will generate positive free cash flow in 2005. Both SBC and BellSouth expect to have some dilution to GAAP and cash earnings per share in 2005 and 2006. Cash earnings per share for both SBC and BellSouth are expected to be accretive in 2007. GAAP earnings per share for BellSouth are expected to accretive in 2008 and accretive for SBC in 2007.

SBC's and BellSouth's proportionate equity stake in Cingular will remain unchanged following the transaction, with SBC holding 60 percent and BellSouth 40 percent of the equity. Management control will remain 50-50.


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