Shares in AT&T Wireless soared on Wednesday as it emerged that the group is once again in takeover talks that could kick-start the long-awaited consolidation of the US mobile phone industry.
According to people familiar with the matter, AT&T Wireless is in talks about a possible takeover by Cingular, the rival operator that is jointly owned by the telecom groups SBC and BellSouth. A deal would create a group that would overtake Verizon Wireless as the largest US mobile phone operator.
However, those people also warned that the two companies have held inconclusive talks in the past, and there was no guarantee that the talks would be successful. The rise in AT&T Wireless shares, which closed up nearly 17 per cent at $9.99 on Wednesday in New York, could also complicate a transaction.
The talks could also spark interest from other potential bidders keen not to be left on the sidelines if the US mobile phone industry begins the consolidation executives say has been necessary for at least the past two years. The tabular content relating to this article is not available to view. Apologies in advance for the inconvenience caused. Reports, analysis and features on everything from e-commerce to the latest gadgets. Go there
Bankers said Deutsche Telekom could make an offer to combine AT&T Wireless with its T-mobile subsidiary, currently one of the smaller US operators. NTT DoCoMo, the Japanese group which owns 16 per cent of AT&T Wireless could also take an interest, as could Vodafone of the United Kingdom, whose US presence currently consists of a minority stake in Verizon Wireless.
A purchase of AT&T Wireless would involve a hefty sum. After Wednesday's rise, the company has a market value of almost $25 billion.
Pressure to agree a deal may have increased since the recent introduction of wireless number portability in the United States, which has allowed subscribers to switch providers without changing their numbers. "What we've learned from number portability is that wireless is a game of scale," said Cannon Carr, an analyst at CIBC World Markets. "Nobody really has that yet."
Executives at BellSouth and SBC have made little secret of their desire to find a partner for Cingular, but have so far been frustrated. Last week Ed Whitacre, SBC's chairman and chief executive, told investors a successful deal would be a function of price and the willingness of potential targets to sell.
AT&T Wireless, Cingular and T-mobile are seen as the most logical merger candidates because they all use the Global System for Mobile technology, making it easier to combine their customer bases.