May 19, 2004 9:54 AM PDT

AT&T Wireless shareholders approve buyout

AT&T Wireless shareholders on Wednesday approved the $41 billion buyout offer from rival Cingular Wireless, continuing to set the stage for a new No. 1 carrier in the United States.

Of the shareholders who actually voted at AT&T Wireless' annual meeting, 98 percent approved the merger with Cingular, slated to take effect by the end of the year. But not all of AT&T Wireless' 2.7 billion shareholders cast ballots. When taking that missing voting block into account, the merger proposal was approved by 65 percent of all shareholders.

Analysts expected the merger to be palatable to shareholders who were eager to see a payoff, which AT&T Wireless CEO John Zeglis described as "handsome." Under deal terms, AT&T Wireless will receive $15 in cash per common share.

More significant is AT&T Wireless' recent problems retaining subscribers; it lost about 250,000 last quarter, which it blamed on network glitches that are now fixed. Analysts believe that any more customer losses could ultimately affect how much Cingular owners BellSouth and SBC pay for the wireless carrier.

The deal would make Cingular the largest wireless carrier in the United States, with about 47 million subscribers after it absorbs AT&T Wireless' approximately 21.8 million customers. Verizon Wireless, currently the largest U.S. carrier, has about 38.8 million subscribers.

AT&T Wireless shareholders on Wednesday also gave Zeglis and NTT DoCoMo USA President Nobuharu Ono additional terms on the board of directors. The board, however, will likely be dissolved, once the buyout is completed, an AT&T Wireless representative said.

 

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