Cingular Bill Could Top US$4 Billion

Siemens has joined the orders placed yesterday by Cingular, with an order that is estimated in excess of US$500 million for the company's migration to GSM and EDGE. The contract would cover what Siemens estimates to be significant volumes of GSM/GPRS/EDGE network infrastructure that operates in the 850 MHz and 1900 MHz spectrum.

Ericsson has now confirmed the value of its order at around US$2 billion, which along with Nokia's US$1 billion contract, brings Cingular's orders to over US$3.5 billion. This is somewhat higher than the US$3 billion Cingular originally proposed back in October, but might include costs incurred by its spectrum bidding partner Salmon PCS, which separately announced a migration to EDGE in November. Add in the un-costed order from ARC Wireless in November for base station antenna and the cost is evidently rising sharply, possibly reaching US$4 billion. How this will impact on Cingular's debt rating will need to be monitored, and clarification is still needed to see if Salmon PCS costs are included. Cingular has refused to comment beyond referring back to its announcement in October. Cingular is also believed to be planning to raise US$2 billion in debt from banks later this week to fund the contracts it has announced.

Both Siemens and Ericsson say they are supplying phones as part of the contract, while Nokia did not make any comment. As Nokia has already committed to supplying GAIT handsets to Cingular, the contract value to Nokia could be higher."

Posted to the site on 4th December 2001