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Cingular, T-Mobile to Disband Joint Venture

As its multi-billion-dollar takeover of AT&T Wireless works through the approval process, Cingular Wireless is moving to end a network infrastructure joint venture with T-Mobile USA.

Cingular will sell its mobile networks California and Nevada, as well as 10 MHz of spectrum space in greater Las Vegas, Sacramento and San Francisco, to T-Mobile for approximately $2.5 billion.

In addition, T-Mobile will receive and option to buy an additional 10 MHz in Los Angeles and San Diego coverage areas.

For its part, Cingular will gain 10 MHz of spectrum from T-Mobile in the New York area as part of the dissolution terms in the companies' joint venture contract signed in 2001.

A spokeswoman for Atlanta-based Cingular was not immediately available for comment.

In a statement, Stan Sigman, Cingular's president and CEO, said, "Over the last two years, our joint venture with T-Mobile has been good for Cingular, its customers and wireless consumers in general. Today's announcement means Cingular's customers will continue to have top-notch wireless service and be able to look forward to advanced data applications in the future."

The transaction is contingent on federal regulators approving of Cingular's acquisition of AT&T Wireless. Officials will also review the terms and market impact of today's Cingular/T-Mobile plan.

Provided they receive the necessary approvals, the companies hope to close the purchase early next year.

With its winning bid for AT&T Wireless, Cingular, a joint venture between SBC Communications and BellSouth , shook up a U.S. mobile marketplace that many industry watchers said was sorely in need of consolidation.

Today's news represents further fallout. For T-Mobile USA, a Bellevue, Wash., subsidiary of German giant Deutsche Telecom , it's a cheaper (compared to an acquisition) way to further expand its reach in the United States. At one time, T-Mobile was thought to be among the possible bidders for AT&T Wireless.

As wireless applications become more advanced and reliable, the value of the airwave increases, as evidenced by the recent wrangling between Verizon Wireless and Nextel.