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Vodafone ups bid for AT&T Wireless

British wireless titan raises its bid for AT&T Wireless to $38 billion, matching Cingular Wireless.

NEW YORK - Britain's Vodafone has raised its bid for AT&T Wireless to $38 billion, or $14 a share, to match a bid by Atlanta-based Cingular Wireless, according to a source close to what has become a bidding war for the third largest U.S. wireless carrier.

"It's a highly fluid situation. It's very competitive. There's a lot of back and forth," said one source.

The board of AT&TWireless was set to meet Monday to assess the offers, sources familiar with the situation told CNNfn. None of the companies would comment officially on the bids.

AT&TWireless, which put itself up for sale on Jan. 22 after a string of poor results, had asked Vodafone and Cingular for sweetened offers after both companies bid roughly the same price, people familiar with talks said Sunday.

Vodafone (VOD: Research, Estimates) said last week it was examining whether an offer, which would force it to sell a lucrative 45 percent stake in Verizon Wireless (VZ: Research, Estimates), the nation's biggest cell phone provider, would be in investor interests. Since the bid deadline passed, Vodafone has said it makes little commercial sense to reveal whether it bid.

Analysts say a combination between Cingular, controlled by SBC Communications Inc. (SBC: Research, Estimates) and BellSouth Corp. (BLS: Research, Estimates), and AT&TWireless makes more sense because the two have overlapping infrastructure, which would allow them to cut costs.

Concerns that a takeover would reduce Vodafone's earnings drove its stock down 3.7 percent in London. The stock has fallen around 9 percent since AT&TWireless called for bids last month.

"We do see Vodafone as a serious bidder now, but we still see Cingular in the driving seat," said another analyst. "They have more shareholder support and stand to get more synergies."

Sources familiar with talks said the two camps were battling it out over the long U.S. holiday weekend and pressure was mounting for a deal. U.S. markets and most businesses were closed for Presidents Day Monday.

AT&TWireless, which is 16 percent-owned by Japan's NTT DoCoMo (DCM: Research, Estimates), has given itself until Feb. 29 to reach a final decision, although an announcement could come as soon as Tuesday.

Hopes of a bidding war sent AT&TWireless (AWE: Research, Estimates) shares to almost $12 Friday, up about 1 percent, valuing the group at nearly $32.5 billion.
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