Wireless Firms May Combine

SBC Communications Inc. and BellSouth Corp. are in talks to acquire AT&T; Wireless Services Inc. and combine it with Cingular Wireless, the mobile phone company they jointly own, people familiar with the matter said.

Discussions have involved executives at San Antonio-based SBC, BellSouth and Cingular, both based in Atlanta, and their counterparts at AT&T; Wireless, said two of the people, who asked to remain anonymous. An agreement may come as early as next month, one of the people said. The talks were reported earlier in the online edition of the Wall Street Journal.

A combination would create the biggest U.S. mobile-phone carrier, with as many as 45 million subscribers. Verizon Wireless, the current No. 1, has 36 million customers. The six nationwide wireless companies need mergers to reduce costs and lessen price pressure as customer and revenue growth slows, said analysts including Viktor Shvets of Deutsche Bank.

“You really need to reduce the playing field to four or less,” Shvets said.

Shares of SBC, the second-largest U.S. local-phone company, fell 38 cents, to $26.45. BellSouth, the third-largest local-phone company, declined 24 cents, to $28.93. Shares of Redmond, Wash.-based AT&T; Wireless gained 42 cents, to $8.55. All trade on the New York Stock Exchange.

Spokesmen from all three firms declined to comment.

Combining Cingular, the second-largest U.S. mobile phone carrier, with No. 3 AT&T; Wireless would help the companies compete with Verizon Wireless, which is more profitable.

SBC and BellSouth are considering selling shares of Cingular in an initial public offering to help finance an acquisition, people familiar with the situation said last month.

SBC owns 60% of Cingular.