Disappointing Leaked Results Muddy AT&T Deadline Day
By Carlo Longino, Fri Feb 13 17:45:00 GMT 2004

Bids for US carrier AT&T Wireless are due later today, with Cingular and Vodafone looking the only two likely candidates. But the issue has become a bit clouded, as AT&T's weak January results were leaked, casting doubt over the company's real value.

AT&T lost a remarkable 4% of its customers in January, its ARPU was off 10% from 2003, and its operating income is down more than 20%. Ow.

This comes on the heels of AT&T's surprise loss last quarter, and could call into question the bids being made for the company, which appears to be struggling. We've wondered before what foreign carriers see in AT&T, and indeed some Vodafone shareholders are already questioning the merit of a potential deal.

A Cingular bid offers that carrier more benefits, as it can combine its and AT&T's networks and operations to cut costs and improve economies of scale. While speculation has mounted this week that Vodafone would submit a bigger bid than Cingular, a number of potential obstacles have also popped up, not the least of which Vodafone's existing deal with Verizon. Some are speculating that selling its stake in Verizon Wireless could make Vodafone liable for up to $6 billion in taxes, though it may be able to lessen the amount by swapping some of its ownership for Verizon's stake in Italian carrier Omnitel.

Vodafone has also reportedly told some large investors that it will seek shareholder approval for any bid, even though it's not required, which may forestall the company's hopes.