AT & T Wireless Services Inc.: Places Under Review with Developing Implications

Chris Diceman, CFA; Paul Holman/416-593-5577 ext. 2242, ext. 2234/cdiceman@dbrs.com

 

“p” indicates based on public information.

 

DBRS has placed AT&T Wireless Services Inc.’s (“AT&T Wireless” or the “Company”) Senior Unsecured Notes “Under Review with Developing Implications” given today’s announcement that Cingular Wireless LLC (“Cingular”) has agreed to acquire the Company for $41 billion.  At the same time, DBRS has placed Cingular’s short-term and long-term ratings “Under Review with Negative Implications” (see separate press release on Cingular).

 

Pending approval by AT&T Wireless’ shareholders and clearance from the U.S. Department of Justice (DOJ) and the U.S. Federal Communications Commission (FCC), expected by the end of 2004, it is anticipated that AT&T Wireless would carry the same credit rating as Cingular upon the closure of this transaction.  This rating would reflect the total amount of inter-company debt that Cingular borrows from its parents, SBC and BellSouth.  The net amount that Cingular could borrow could be as high as $36 billion.

 

The deal values AT&T Wireless at approximately $47 billion ($41 billion of equity and approximately $6 billion in net debt outstanding) and would create the largest wireless carrier in the U.S. with 46 million subscribers and nearly 30% of the market ahead of the current leader, Verizon Wireless Inc., with 36 million subscribers.