AT&T; Wireless May Be Asking for Higher Bids

AT&T; Wireless asked rival bidders Vodafone Group and Cingular Wireless on Sunday to sweeten offers worth about $35 billion, sources familiar with the talks said.

Vodafone had been expected to submit an offer of about $35 billion, or about $12.50 a share, that would trump an informal $30-billion bid from Cingular, the No. 2 wireless carrier in the U.S. controlled by SBC Communications Inc. and BellSouth Corp.

But Cingular on Friday raised its offer for AT&T; Wireless, the struggling, third-ranked U.S. mobile phone group, leaving it neck-and-neck with Vodafone. As senior Cingular executives met Sunday to discuss their strategy, sources familiar with the talks said, pressure was mounting for a fast deal.

“This is a real-time process,” one source said. “This is something that is going to get decided quickly.”

AT&T; Wireless, which is 16% owned by Japan’s NTT DoCoMo Inc., put itself up for sale Jan. 22 after a series of poor results, signaling the start of an overdue consolidation in the overcrowded U.S. cellphone market.

The company, which will evaluate bids over Presidents Day weekend, has given itself until Feb. 29 to reach a final decision, although an announcement could come as soon as Tuesday.

“It’s a very fast-moving situation,” said another source familiar with the talks.

Vodafone and Cingular declined to comment and AT&T; Wireless was not immediately available.

Prospects of a bidding war have sent AT&T; Wireless shares to almost $12 on Friday, valuing the group at $32.56 billion.

Some Vodafone investors remain unconvinced about the merits of a bold offer. But a growing number of shareholders in the British-based firm are braced for Chief Executive Arun Sarin to fight for an asset that would give the group long-sought control of a company in the U.S. and would bring its brand across the Atlantic.

Vodafone’s camp has been frustrated that auction tactics have prevented it from arguing its case before investors, who have been skeptical of an earnings-dilutive takeover that could spell the return to empire-building seen under former CEO Chris Gent.

The market is split on whether Vodafone, which would have to sell a lucrative 45% stake in top-ranked Verizon Wireless, could justify out-gunning Cingular. Analysts have said Cingular could afford to sweeten its bid by $2 a share, funded by the expected cost savings of merging two U.S. networks.

Atlanta-based Cingular is expected to be a determined bidder. Shareholder SBC said in January that it thought the U.S. mobile industry, in which six major national brands and a few regional players battle for market share, was ripe for mergers and that it would consider certain purchases even if they hurt earnings.

But Vodafone has won a reputation for aggressiveness since its $66.5-billion bid for U.S. wireless group AirTouch in 1999 and a $229-billion hostile takeover of German ally Mannesmann one year later.

However, both sides know that AT&T; Wireless is losing both money and customers. The group reported a fourth-quarter loss and in January lost nearly 4% of its customers and saw its operating income fall more than 20% from a year ago, sources have said.

AT&T; Wireless shareholder DoCoMo, which also had been tipped as a possible bidder, on Friday decided against submitting an offer after deciding it lacked the staff or bulk to realistically acquire and operate a company as large as AT&T; Wireless, one source said.