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AT&T Wireless spends $3.3B for cellular assets

    AT&T Wireless Group (Nasdaq: AWE) said Monday it has snapped up new wireless systems in the San Francisco Bay-area, San Diego and Houston markets for $3.3 billion.

    The company is drawing on the huge wad of cash it raised in a spin-off from parent AT&T (NYSE: T) in April. The offering -- the largest ever in the U.S. with a float of 360 million shares -- raised $10.6 billion, $7 billion of which went to the AT&T Wireless Group.

    In San Francisco, AT&T Wireless is acquiring the remaining interest from Vodafone Airtouch (NYSE: VOD); the San Diego system is being acquired from GTE (NYSE: GTE) and the Houston system from PrimeCo PCS.

    "This is a critical move that gives us three systems -- San Francisco, San Diego and Houston - which cover a population of approximately 15 million," said chairman and CEO John Zeglis in a company statement. They were the last three cities in the nation's top 15 wireless service markets that did not have AT&T-branded wireless service.

    Depending on when it closes, AT&T Wireless said the transaction may dilute earnings by 2 to 3 cents. On a full-year basis, the deals represent about $850 million of revenue (not including AT&T Wireless roaming) and in excess of $300 million of EBITDA (earnings before interest, taxes, depreciation and amortization, excluding other income), excluding transition costs.

    The acquisitions will expand AT&T's national wireless network and add more than 1.3 million customers to AT&T branded service.

    The deal is expected to close concurrent with or following the Bell Atlantic/GTE merger and before year-end.