ATLANTA (AP) — Cingular Wireless agreed to pay nearly $41
billion to buy AT&T Wireless Services to create the
nation’s largest mobile phone company, raising concern among
consumer advocates that it may hurt competition and impede lower
prices.
The deal announced yesterday between the second and third
largest U.S. wireless companies would create a cellular giant with
46 million subscribers and 70,000 employees. Current market leader
Verizon Wireless has 37.5 million customers.
The deal — subject to approval by AT&T Wireless
shareholders and federal regulators — would be a boon for
Atlanta-based Cingular’s efforts to cut costs, fill service
gaps and expand its spectrum, or radio frequency, in several key
U.S markets, thus enabling it to offer wireless Internet access at
broadband speed.
“This combination is expected to create customer benefits
and growth prospects neither company could have achieved on its
own, and will mean better coverage, improved reliability, enhanced
call quality and a wide array of new and innovative
services,” said Stan Sigman, president and chief executive of
Cingular, who will continue to lead the company.
Some fear the merger could reduce the fierce competition that
has driven down prices in the U.S. cellular market, trimming the
number of national players from six to five.
“Losing a competitor in this kind of market hurts
consumers, especially when you’re merging the big
players,” said Mark Cooper, director of research at the
Washington-based Consumer Federation of America. “It’s
not five and six that’s merging. It’s two and three,
and that’s a much bigger impact on competition.”
Guzman and Co. analyst Patrick Comack said he doesn’t
expect prices to go up if the deal is approved. “You still
have some very aggressive competitors out there,” he
said.
Cingular, a joint venture between SBC Communications Inc. of San
Antonio and BellSouth Corp. of Atlanta, said it will pay $15 cash
per share.