Cingular Makes Preliminary Offer to AT&T; Wireless

Cingular Wireless has made an overture to buy smaller rival AT&T; Wireless Services Inc., but the nation’s third-largest mobile phone company is likely to set up a formal process to collect bids from several suitors, sources close to the situation said Tuesday.

Cingular, No. 2 behind Verizon Wireless, outlined its all-cash proposal to AT&T; Wireless executives before a scheduled two-day meeting of that company’s board that began Monday, but it has yet to put an offer in writing, one source said.

The proposal, which was likely to be slightly more than AT&T; Wireless’ current market capitalization of about $27 billion, was more of an enticement to step up talks and to edge out rivals who have shown preliminary interest, the source said.

“There’s a preliminary valuation floating around. But that’s more of a lure to get serious on talks rather than a hard-and-fast offer,” said the source, who declined to disclose that valuation.

An acquisition of AT&T; Wireless would set in motion long-awaited consolidation in the crowded U.S. wireless industry, which has seen slowing subscriber growth and cutthroat competition.

Atlanta-based Cingular, a joint venture of local telephone companies SBC Communications Inc. and BellSouth Corp., declined to comment, as did AT&T; Wireless.

Shares of AT&T; Wireless rose 40 cents to $10.39. SBC shares rose 53 cents to $27 and BellSouth shares rose 47 cents to $29.68. All three trade on the New York Stock Exchange.

Enough carriers have expressed interest in the company -- including Japan’s NTT DoCoMo Inc. and Nextel Communications Inc. -- that AT&T; Wireless’ board is likely to set a deadline for formal bids, several sources said.

NTT DoCoMo and Nextel declined to comment.

Although some people familiar with the talks said Cingular aimed to cement a deal by Tuesday, when AT&T; Wireless is scheduled to report fourth-quarter earnings, others suggested that the Redmond, Wash.-based carrier would take its time in entertaining offers.