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The Department of Justice is prepared this week to approve Cingular Wireless LLC’s $41 billion acquisition of AT&T Wireless Services Inc., a move that will bring the companies close to completing the biggest wireless telecom merger in U.S. history. Although the agency’s so-called consent decree will not require the companies to divest a significant amount of wireless spectrum, they will be required to make limited sales in specific geographic markets, such as rural communities where the carriers have excess capacity, sources said. “It is playing out as predicted,” one Washington source said. Last-minute delays are common in federal merger investigations, though sources said the government and wireless companies have resolved their disagreements. The deal still requires approval by the Federal Communications Commission. One source said the FCC staff members intend to forward their recommendation on the merger to the agency’s five commissioners by Sept. 29. The commissioners are likely to act on the merger two weeks later, allowing Cingular to close the deal by Oct. 13. A Cingular spokeswoman did not immediately return a call for comment. Cingular and AT&T Wireless said in a joint statement issued Sept. 2 that they intend to close the deal in the fourth quarter. The Justice Department and FCC have worked closely on the investigation, which suggests the telecom agency is unlikely to demand significant additional divestitures from the companies. Regardless, the divestitures demanded by regulators will be far below the amount that would give Cingular the right to back out of the deal. The merger agreement requires the company to divest spectrum and customers worth up to $8.25 billion. That equates to dumping 10 million of the 22 million AT&T Wireless customers Cingular stands to gain in the deal. “They are nowhere near the level in the merger agreement,” one investor said. A potential snag in closing the deal quickly could come from the FCC, where the two Democratic commissioners on the panel may raise questions about the transaction that take more than two weeks to answer. Sources have said that Cingular officials pushed hard to expedite government review of the merger so they could complete the transaction before the November elections, which, regardless of the winner, could lead to changes among senior officials at the Justice Department and FCC. Cingular gained confidence in August that a quick closing was possible. The Justice Department in early August asked a federal judge to amend the 2000 consent decree that gave BellSouth Corp. and SBC Communications Inc. permission to create the wireless carrier. The change permits Cingular to reacquire some spectrum in California and Indiana that its parents sold in 2000 to AT&T Wireless. Government documents suggest the Justice Department was analyzing the Cingular deal in a way that is favorable for the companies. For instance, it notes that the combined Cingular-AT&T Wireless would have at least 20 percent lower market share if they merged than BellSouth and SBC had in Los Angeles and Indianapolis prior to the creation of Cingular. The government also did not include competition from wireline services in its analysis. That benefits Cingular because its Baby Bell parents have massive wireline systems. Atlanta-based Cingular agreed in February to buy Redmond, Wash.-based AT&T Wireless for $15 per share. Copyright �2004 TDD, LLC. All rights reserved.

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