A bidding war erupted Sunday for control of AT&T Wireless as Vodafone, based in Newbury, England, and Cingular Wireless, a joint venture of BellSouth and SBC Communications, submitted new bids that could value the company at more than US$37 billion or about US$14 a share, executives close to the negotiations said.
AT&T Wireless was still negotiating with both companies Sunday evening and a decision to accept one of the offers was expected as early as yesterday, the executives said.
The decision by Vodafone, the world's largest cellular telephone operator, to raise its offer on Sunday and participate in what appears to be a rapid-fire auction puts pressure on Cingular, which had long been favored by investors and analysts to win control of AT&T Wireless. The new bids, executives said Sunday, came after Vodafone and Cingular submitted similar offers on Friday night, both worth about US$35 billion dollars, or nearly US$13 a share.
"It's going back and forth," said one executive close to the auction.
The executives said NTT DoCoMo, which already owns about 16 percent of AT&T Wireless and had indicated that it was considering a bid, decided against participating, as did Nextel Communications, another rival that had expressed interest.
It was unclear Sunday night just how high the bids would go. Vodafone appears to be taking the strategy of simply trying to match Cingular's offers. The assumption inside the Vodafone camp is that if the bids are equal, a Vodafone deal is more attractive because there would be less regulatory risk involved and much of AT&T Wireless' management and employees would remain intact, the executives said.
If Cingular won, most of AT&T Wireless' staff would probably lose their jobs because they would overlap with Cingular's management.
For Cingular, winning the auction is seen as essential if it wants to grow. AT&T Wireless is one of only two cellular operators in the US that use the same cellular technology as Cingular (the other is T-Mobile). A merger with Cingular would be expected to save US$10 billion to US$15 billion in costs. Combining AT&T Wireless' 22 million customers with Cingular's 24 million would create the largest cellphone company in the US, surpassing the subscriber base of Verizon Wireless, which has 37 million users.
If Vodafone wins, it will unravel its 45 percent stake in Verizon Wireless. Vodafone reached a tentative agreement on how it would extricate its stake in Verizon Wireless last week, the executives said.
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