For those following cell phone issues, this story just moved     on the
Dow Jones News Service a few minutes ago.  It will appear in tomorrow's
Wall Street Journal and in newspapers across the country.  In addition to
owning much of Cingular, SBC is America's second biggest wireline
telephone company providing local telephone service in states in the
Midwest and Southwest as well as California.

Kelly

The Wall Street Journal
January 14, 2004

    AT&T Wireless, Cingular in Talks On Possible Deal

    By JESSE DRUCKER and ALMAR LATOUR
Staff Reporters of THE WALL STREET JOURNAL

    NEW YORK -- Cingular Wireless and AT&T Wireless Services Inc. are in
talks over a possible merger or acquisition that could jumpstart the
long-awaited consolidation of the wireless industry, people familiar
with the situation say.

    Stock of AT&T Wireless rose 5.2% in trading Tuesday as rumors spread
of a potential deal.

    The Wall Street Journal reported last month that Cingular Wireless
is considering an initial public offering and that its interest in
acquiring AT&T Wireless had intensified. Since both Cingular and AT&T
Wireless held a round of talks more than a year ago, it may not take
much time for each side to complete a deal, which would combine the
nation's second- and third-largest wireless companies. It isn't known
exactly when the current round of talks started.

    One potential complication in the talks is another company entering
the fray, which many involved in the negotiations expect if the
long-awaited consolidation of the industry is at hand, according to
people close to the situation.

    Cingular's parent companies, SBC Communications Inc. and BellSouth
Corp., declined to comment.

    SBC, which owns 60% of Cingular, has been particularly vocal about
the company's desire to expand its wireless operation. Spokespeople for
AT&T Wireless and Cingular declined to comment.

    AT&T Wireless has emerged as the most desirable U.S. wireless
company for potential acquirers: It has the third-largest number of
subscribers after Cingular. Verizon Wireless, a joint venture of Verizon
Communications Inc. and Vodafone Group PLC has the most subscribers.

    AT&T Wireless has a strong balance sheet and the largest number of
business customers of any cellphone operator. The company has been
struggling during the past year, reporting tepid subscriber growth and
losing market share. One potential additional bidder could be T-Mobile
USA Inc, the U.S. wireless arm of Deutsche Telekom AG. In 2002, T-Mobile
company was in talks to merge with both Cingular and AT&T Wireless, but
then T-Mobile was widely seen as a takeover target. Parent Deutsche
Telekom had a heavy debt load and the carrier had only recently
rebranded and expanded operations in the U.S.

    Today, however, both Deutsche Telekom and its wireless unit are in
better shape, with less debt, a larger U.S. market share and stronger
brand recognition. The former head of Deutsche Telekom's wireless unit
is now the head of Deutsche Telekom in its entirety company.

    Large U.S. phone companies increasingly depend on the wireless
companies for growth, as competition in their traditional business area
of local-telephone service increases rapidly amid the arrival of new
technologies and cable companies seeking new business opportunities.

    Additionally, new wireless data technology may provide phone
companies with an opportunity to compete more fiercely with cable
companies. Just last week, the wireless arm of Verizon Communications
announced plans to invest $1 billion in a new wireless data network that
can deliver speeds comparable to wired Digital Subscriber Lines and
cable modems offered by landline phone companies and cable companies.

    For Cingular's parent companies, wireless expansion long has been
crucial. The company suffers from a lack of spectrum and its brand name
is barely known outside of its home territories.

    At 4 p.m. in New York Stock Exchange composite trading Tuesday, AT&T
Wireless was up 42 cents at $8.55.

    Write to Jesse Drucker at
[log in to unmask]
and Almar Latour at
[log in to unmask]

    Updated January 14, 2004


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