Cingular Wireless raises expectations

Cingular Wireless L.L.C. provided a financial update of its acquisition of AT&T Wireless Services Inc., highlighted by expectations of between $3.6 billion and $5 billion in cost savings from the deal by 2007, which is nearly double the $1.8 billion to $2.7 billion the carrier forecast earlier this year. Cingular said it expects to post a profit and positive free cash flow beginning next year, a year ahead of previous forecasts.

In addition, Cingular’s management reported fourth-quarter net customer additions are running ahead of combined third-quarter results as well as improved customer churn. The newly combined carrier expects to post industry-leading operational metrics by 2007.

“My clear expectations is that we will achieve steady, continuous improvements to reach industry-leading metrics including churn and margins by the end of 2007,” said Stan Sigman, Cingular’s president and chief executive officer.

Cingular also said it expects capital expenditures to peak next year at around $7 billion as it begins deploying its UMTS/HSDPA network as well as improving AWS’ network capacity in California and Nevada to compensate for the previously announced $2.5 billion sale of the Cingular network in those markets to T-Mobile USA Inc.

Cingular reported the completion of a previously announced market swap agreement with Triton PCS Holdings Inc. and AWS. The deal, which was originally announced in September, calls for Cingular to receive Triton PCS’ network assets and customers in Virginia in exchange for Triton PCS receiving certain AWS network assets and customers in North Carolina and Puerto Rico plus $175 million in cash from Cingular. In addition, the deal freed Triton PCS from its affiliation arrangement with AWS, allowing Cingular to compete against Triton PCS, which will now exclusively market its services using the SunCom brand name.

The closing of the agreement was contingent on Cingular gaining approval for its acquisition of AWS, which it did in late October.