Home     |     News     |     Press Releases     |     Newsletter Subscription     |     Tell A Friend

How to Search   Tips

 

 Solutions Catalog
 Products & Services
 Vendors
 The Market
 Application Mall
 Business Cases
 Solution Components
 Networks
 Application Development
 System Design
 Resources & Links
 Education
 Professional Services
 Conferences & Events
 Reports & Presentations
 Templates & Aids
 Glossary
 Community Forum
 News
 Topics
 Handheld

 
News
Issue #2004 - 02 (February 2004)
(Updated Feb. 9, 2004)

INFRASTRUCTURE, PRODUCTS & SERVICES

Cingular Bid for AT&T Stirs Wireless Pot

A multibillion-dollar takeover unfolding in the U.S. wireless market could prod Vodafone Group, the world's largest international mobile phone group, into a counterbid and strategic U-turn.

British-based Vodafone has consistently stressed it is content with a 45 percent stake in Verizon Wireless, the largest mobile phone group in the United States with about 36 million customers, despite its wider strategy of gunning for control of overseas assets. But the gloves might be about to come off.

One source familiar with the situation told Reuters on Tuesday that Cingular, the No. 2 U.S. mobile group, had made a formal bid for No. 3 rival, AT&T Wireless, which has a market capitalization of about $27 billion.

Bid terms remained shrouded in mystery as the European markets closed, but such a move would push Verizon Wireless into the No. 2 slot in the United States, which would throw down the gauntlet to Vodafone. Industry sources told Reuters last week that Vodafone, among others, had also cast its eye over AT&T Wireless.

"It would be really odd if Vodafone weren't seriously interested (in AT&T Wireless)," noted one industry source familiar with talks. Vodafone declined to comment.

Vodafone likes to stress that Verizon Wireless is a prized investment that generates healthy dividends. But few experts doubt that the British mobile phone titan would prefer majority control over U.S. technology and service development, to fully integrate the business and create a truly global brand. 

The price of control
Most market experts believe Vodafone would be unlikely to clinch control of Verizon Wireless without a hostile bid for majority shareholder Verizon Communications, a $102 billion group with fixed-line assets which Vodafone, a pure cell phone operator, would subsequently be expected to sell. 
Such a bid would be complex, costly and is considered unlikely in a market that is just starting to pick itself up after one of the most precipitous share price falls in history.

But under former CEO Chris Gent, Vodafone won a reputation for aggression after a $225.3 billion record hostile takeover of former German ally Mannesmann in 2000.

Some analysts warned investors against assuming the financially powerful group would remain on the sidelines. Vodafone, which has relatively little debt and a solid credit rating, might not get a second chance to take control in the United States and might try to trump any Cingular bid, selling its Verizon Wireless stake back to Verizon Communications. 

Unraveling the Verizon joint venture would be complicated, analysts say. And any bid for AT&T Wireless, which is 16-percent owned by Japanese cell phone giant NTT DoCoMo, is also expected to be earnings and cashflow dilutive in the short-term, partly because Vodafone would have to pay a premium. 
But there are compensations. Unlike Verizon Wireless, AT&T Wireless has overlaid its network with Global System for Mobile Communications (GSM)--a technology that is compatible with Vodafone's European networks and would allow greater roaming revenue from globe-trotting customers. 

AT&T Wireless has a market share of about 15 percent, but pips Cingular when it comes to revenue. Analysts have penciled in revenue of about $16.5 billion for AT&T Wireless this year, compared to $15 billion for Cingular, a joint venture between BellSouth and SBC Communications. Verizon Wireless is forecast to generate about $22 billion of revenue. 

Source: Reuters

MobileInfo Comments and Advisory: 

Note: This news release may contain forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of Securities Exchange act of 1934 in USA. Similar provisions exist in other countries. There is no assurance that the stipulated plans of vendors will be implemented. MobileInfo does not warrant the authenticity of the information. Readers should take appropriate caution in developing plans utilizing these products, services and technology architectures.  All trademarks used in this summary are the property of their respective owners.


NEWS Options:
> Recent Headlines
> Date
> Category
> Press Releases
 

 

 
Home
     |     News     |     Press Releases     |     Newsletter Subscription     |     Tell A Friend

Copyright 1999 - 2004.  All Rights Reserved. 
Reproduction of any material from the MobileInfo.com website or its newsletters without written permission is strictly prohibited.