Justice Department antitrust regulators cleared the way Monday for Cingular Wireless LLC's $41 billion acquisition of AT&T Wireless Services Inc., a crucial step toward creating the nation's largest wireless telephone company.
The merger still must be approved by the Federal Communications Commission. That approval could come as early as Tuesday.
Under an agreement with the Justice Department filed in federal court in Washington, Cingular must divest itself of assets in 11 states.
"Without these divestitures, wireless customers in these markets would have had fewer choices for their wireless telephone service and faced the risk of higher prices, lower quality service and fewer choices for the newest high-speech mobile wireless data services," said R. Hewitt Pate, assistant attorney general for the
Justice Department's antitrust division.
Cingular is an Atlanta-based joint venture of BellSouth Corp. and SBC Communications Inc. of San Antonio. Its acquisition of Redmond, Wash.-based AT&T Wireless would create a cellular phone colossus with 46 million customers, topping the 37.5 million customers of Verizon Wireless and paring the number of national wireless phone players to five.
Together the two companies have about 70,000 employees, although layoffs are expected if the merger goes through.
The settlement requires the merged company to divest assets in parts of Connecticut, Georgia, Kansas, Kentucky, Louisiana, Massachusetts, Missouri, Michigan, Oklahoma, Tennessee and Texas. These assets include wireless services businesses and radio wave spectrum licenses.
The Justice Department was joined in the court settlement by the states of Texas and Connecticut. A judge still must sign off on the agreement.
Last week, Cingular reported that operating profits slipped 5.5 percent despite gains in both subscribers and revenue. AT&T Wireless posted a 25 percent drop in third-quarter net income.
BellSouth transferred several of its assets in Latin America this month, to Spanish telecommunications company Telefonica SA, to raise cash needed for the deal.
By Curt Anderson