AT&T; Wireless Moves Toward Sale

Signaling potential consolidation in the mobile phone industry, AT&T; Wireless Services Inc. on Thursday hired advisors to recommend whether the nation’s third-largest wireless company should be sold.

Rumors about AT&T; Wireless have bubbled since it spun off from AT&T; Corp. in 2001, but they intensified over the last week as the company reportedly mulled over offers from competitors such as Cingular Wireless.

But on Thursday the Redmond, Wash.-based company said it hired investment banker Merrill Lynch & Co. and New York law firm Wachtell, Lipton, Rosen & Katz to evaluate “strategic alternatives.” Chairman John D. Zeglis said AT&T; Wireless has had “many” contacts from prospective bidders.

The news overshadowed the company’s poor fourth-quarter results -- it lost $84 million, suffered its slowest sales growth and added only 128,000 net new subscribers -- and lackluster showings at AT&T; and BellSouth Corp., which owns 40% of Cingular Wireless.

AT&T; Wireless is “a company that needs to be sold,” said industry analyst F. Drake Johnstone at Davenport & Co. in Richmond, Va. “It needs to combine with Cingular. They’d have 45 million customers; they’d reduce their costs substantially and operate much more efficiently.”

Such a union would create the nation’s largest mobile phone carrier, overtaking Verizon Wireless.

Cingular’s parents, BellSouth and 60%-owner SBC Communications Inc., also have the deep pockets to pay as much as $30 billion in cash for the company, analysts said. A bid of $27 billion already is on the table, according to news reports.

AT&T; Wireless’ fourth-quarter loss of 3 cents a share, was an improvement over its loss of $136 million, or 5 cents a share, for the final quarter of 2002. Sales rose 4% to $4.2 billion from $4 billion.

For the year, AT&T; Wireless earned $429 million, or 16 cents a share, contrasted with the previous year’s loss of $2.3 billion, or 87 cents a share. Annual sales grew 8% to $16.7 billion from $15.6 billion.

Shares in AT&T; Wireless fell 43 cents to $10.56 on the New York Stock Exchange.

In other telecom earnings:

* AT&T;, the nation’s largest long-distance company, earned $340 million, or 43 cents a share, for the final quarter, a 34% drop from the previous year’s fourth-quarter earnings of $516 million, or 66 cents a share. Sales dropped 13% to $8.1 billion from $9.3 billion.

For the year, the New York company earned $1.9 billion, or $2.36 a share, contrasted with the previous year’s loss of $13.1 billion, or $17.08 a share. Revenue fell 9% to $34.5 billion from $37.8 billion.

Without an effective bundle that includes wireless and broadband Internet in California and other states, AT&T; has been losing long-distance lines to SBC and other Baby Bells, which intensified competition last year by lowering prices.

AT&T; said it expected revenue to fall 7% to 10% this year.

Its shares fell 85 cents to $20.40 on the NYSE.

* BellSouth reported a 37% jump in fourth-quarter profit to $787 million, or 43 cents a share, from $574 million, or 31 cents a share, a year earlier. Sales inched up to $5.74 billion from $5.69 billion.

For the year, the Atlanta-based company earned $3.9 billion, or $2.11 a share, compared with a profit of $1.32 million, or 71 cents a share, the previous year. Annual revenue grew to $22.63 billion from $22.44 billion.

BellSouth shares fell 1 cent to $29.39 on the NYSE.

* Cingular Wireless, which released its results Wednesday, said earnings dropped 36% to $329 million for the last quarter from $516 million. Sales rose 5.6% to $3.9 billion from $3.7 billion. Cingular profit is shared by SBC and BellSouth.

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Associated Press was used in compiling this report.