T-Mobile pays $2.5bn in Cingular networks deal

Wireless carriers Cingular Wireless and T-Mobile USA have said they will shelve a three-year-old network infrastructure joint venture, based on the former's pending buyout of AT&T Wireless.

The partnership helped Cingular enter the wireless market in New York City and gave T-Mobile a foothold in the California and Nevada regions. Under the agreement to end the enterprise, Cingular will sell the shared California and Nevada network, along with other spectrum in those markets, to T-Mobile for about $2.5bn.

T-Mobile, a US subsidiary of Germany's Deutsche Telekom, said it will provide network services to Cingular customers until the AT&T Wireless acquisition is complete. And while both carriers pledged that customers will be unaffected by the arrangement, T-Mobile indicated that it will replace its existing roaming agreement with Cingular with a new nationwide agreement under different terms.

The T-Mobile pact had been significant to Cingular's growth because it allowed the company to enter New York, one of the nation's largest and most competitive wireless markets, in a cost-effective manner. The two companies described the relationship as an infrastructure "factory" that effectively made wireless coverage available to both carriers in lucrative and fast-growing metropolitan locations.

"Over the last two years, our joint venture with T-Mobile has been good for Cingular, its customers and wireless consumers in general," Stan Sigman, Cingular CEO, said in a statement.

If the AT&T Wireless buyout is successful, Cingular, itself a joint venture between SBC Communications and BellSouth, will cover 47 million US subscribers. By comparison, Verizon Wireless, currently the largest US carrier, has 38.8 million customers.

T-Mobile said it expects to build a customer base of more than 16 million wireless subscribers by the end of 2004. The company also raised its estimate for the long-term growth, predicting that it will have 30 million to 35 million customers within 10 years. The firm had previously estimated that it will serve about 25 million consumers by 2009.

Matt Hines writes for CNET News.com.