AT&T Wireless Acquires TeleCorp

The Wireless spawn of AT&T gets set to roll out branded services to 32 million more people across 14 states in 16 of the top 100 U.S. markets along with more than 900,000 existing TeleCorp customers.

by Roy Mark of dc.internet.com [October 9, 2001]

AT&T Wireless acquires TeleCorp PCS in an all-stock transaction valued at $4.7 billion. AT&T Wireless (NYSE:AWE) buys out the remaining 77 percent of the Virginia-based TeleCorp NASDAQ:TLCP) it does not already own for $2.4 billion and assume $2.1 billion in net debt and approximately $221 million in preferred securities.

TeleCorp owns spectrum licenses capable of covering approximately 37 million people from the Great Lakes to the Gulf of Mexico. The company offers its SunCom digital wireless services in select markets throughout 14 states and the Commonwealth of Puerto Rico, encompassing 8 of the top 50 markets and 16 of the top 100 markets.

The boards of directors of both companies have approved the transaction and the TeleCorp PCS shareowners representing a majority of the voting power have committed to vote in favor of the acquisition.

The particulars
The Redmond, Washington-based AT&T Wireless said it would offer TeleCorp PCS shareowners 0.9 shares of AT&T Wireless common stock for each share of TeleCorp PCS common stock, representing a premium of 19 percent based on the average of the closing prices for the past 30 trading days for TeleCorp PCS common stock. AT&T Wireless closed Friday trading at $16.12 a share while TeleCorp closed at $10.04 a share.

AT&T Wireless will issue approximately 146 million additional common shares to acquire the remaining outstanding TeleCorp PCS common shares. Following the close of the acquisition, AT&T Wireless would have approximately 2.68 billion common shares outstanding. The transaction is structured to be tax-free to TeleCorp PCS shareowners.

"Strategically, this is the single most important move we could make to enhance long-term shareowner value," said AT&T Wireless Chairman and CEO John D. Zeglis. "We're set to quickly roll out AT&T Wireless-branded services to 32 million more people across 14 states. That includes 16 of the top 100 U.S. markets, eight of the top 50 markets and more than 900,000 existing TeleCorp customers. Soon, we will be offering millions of potential new customers a full array of AT&T Wireless' popular local, regional and national offers.

Both companies said they expect the transaction to close in the first half of 2002, following approval from TeleCorp PCS shareowners and approvals from the Federal Communications Commission and Department of Justice. The companies do not anticipate significant regulatory issues given that the proposed transaction will result in a minimal overlap of markets.

AT&T Wireless will be adding markets covering a population of about 32 million in 14 states—primarily in the Southeast and Midwest including such markets as New Orleans, Nashville, Memphis and Louisville—as well as the commonwealth of Puerto Rico. The company said it will be paying approximately $154 per licensed POP or $180 per covered POP. This compares favorably to AT&T Wireless' current valuation of $182 per licensed POP and $237 per covered POP.

The largest independently traded wireless carrier in the United States, following a split from AT&T on July 9, AT&T Wireless operates one of the largest digital wireless networks in North America. The company has more than 16.4 million subscribers, and full-year 2000 revenues exceeding $10.4 billion.

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