Let the guessing begin.  Sprint, T-Mobile or Nextel?

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AT&T plans return to wireless business
Monday April 5, 4:34 PM EDT

By Justin Hyde
WASHINGTON, April 5 (Reuters) - Less than two months after the sale of AT&T
Wireless to Cingular was announced, AT&T Corp. (T) is already looking for a
partner to help it get back into the wireless business.

The largest U.S. long-distance company has recently said it will quickly
re-establish its brand in the growing market for wireless phones once the
Cingular deal is complete, by reselling the service of another wireless
company, as Virgin Mobile does with Sprint Corp. (FON).

The question being raised in the industry is whether AT&T will look to a
rival such as Sprint, which could offer the widest coverage and a variety of
services, or avoid a direct competitor in favor of a smaller player, such as
Nextel Communications Inc. (NXTL).

AT&T, which was dropped from the Dow Jones Industrials Index last week, spun
off AT&T Wireless in 2000 to cut its $65 billion debt after a failed attempt
in the late 1990s to form a one-stop shop for telephone, data, wireless, and
entertainment services.

But with wireless subscribers poised to grow beyond 160 million this year,
surpassing the number of land-line users for the first time, large telecom
companies see wireless services as an essential part of their business.

AT&T Chairman and Chief Executive David Dorman made it clear at a Gartner
Group conference last week that regardless of which company it chooses as a
partner, AT&T will not waste any time out of the wireless game.

"Upon closing approval of the Cingular acquisition of AT&T Wireless we'll
get the brand back, and we'll be back in wireless probably the next day,"
Dorman said.

The Cingular deal not expected to close for several months.

"There are 22 million people using AT&T Wireless today. What's your bet on
how many of those are brand loyal to AT&T?" Dorman said.

TO COMPETE OR NOT TO COMPETE

Among wireless companies, Sprint has been the most aggressive about jumping
into the wholesale business, with Virgin Mobile and Qwest (Q) as its major
resale customers so far.

Analyst Jeffrey Kagan said that given Sprint's moves as a wholesaler, its
nationwide network and the variety of services it could offer, it was the
most likely partner for AT&T.

"This industry is splitting into a wholesale and retail business," Kagan
said. "At the same time, you're an archrival with a company, that company is
a supplier or customer with you on another initiative."

But others say AT&T will be loath to offer any support to a direct
competitor, especially when both companies would likely target the same
customers with bundles of local, long-distance and wireless phone service.

That leaves Nextel and Deutsche Telekom's (DTEGn) T-Mobile as the two
alternatives. Standard & Poor's equity analyst Kenneth Leon says AT&T is
more likely to choose Nextel because the two have a similar focus on
business customers, a market Dorman highlighted in his talk.

"Nextel has a brand that is well suited for high-end users and business
customers, which might fit into AT&T well," Leon said.

Nextel did not immediately respond to a call for comment.

Jane Zweig, chief executive of The Shosteck Group, a Washington-based
wireless consulting firm, said AT&T was one of several companies mulling
ways to jump-start a wireless business by reselling services, which could
create confusion among consumers.

"In the public's mind, it may look as though there's consolidation" in the
wireless industry, Zweig said. "The reality is there's going to be a
proliferation of brands."

Bill Radio
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