AT&T Wireless-Cingular Deal Rumors Intensify

The on-again off-again informal talks between AT&T Wireless and Cingular Wireless are apparently on again, as the nation's two largest TDMA and GSM providers search for a synergistic way to face the future.

In the wake of a surging stock price for AT&T Wireless, the Wall Street Journal reported that the two firms are talking "possible merger or consolidation." With five major mobile-phone companies stalking each other for deals, an AT&T Wireless-Cingular deal makes sense: The two firms already have a joint agreement to build wireless infrastructure towers in Western states and, of course, they share the same move towards 3G GSM.

A combination of the two companies would present a powerful competitor to Verizon Wireless, which has an estimated 24 percent of the country's mobile-phone users. A merger or cooperative agreement between AT&T with 14.5 percent mobile-market share and Cingular's 15.5 percent would catapult a joint entity ahead of Verizon.

Cingular is jointly owned by former regional Bells SBC Communications and BellSouth, but the firm is still a private company. AT&T Wireless is a public company, and Japan's NTT DoCoMo has a stake in the firm as well. Getting all parties together won't be easy. Waiting in the wings is Deutsche Telekom AG's T-Mobile USA Inc., which also uses the GSM standard, making it a potential partner. T-Mobile has an estimated 8 percent share of the U. S. mobile-phone market.

Like Verizon Wireless, Sprint PCS operates on the CDMA standard. Sprint has a market share of about 10 percent, according to market share estimates by researchers.None of the companies involved in the informal talks are saying anything publicly, but AT&T Wireless' stock movement is a likely sign that something is going on.