AT&T sets date for wireless spinoff

AT&T said it would spin off AT&T Wireless into an independent company July 9 as it sets the stage to divest its ailing telephone and cable television businesses.

All AT&T investors will receive about a third of a share in AT&T Wireless as a special dividend on each AT&T share they hold. Tracking shares that represent AT&T Wireless will be converted into a common stock on a one-to-one basis.

The spinoff will follow a special exchange offer AT&T Wireless made at the end of May that allowed AT&T shareholders to trade in their AT&T stock for wireless stock. AT&T shareholders reacted unenthusiastically to the special offer. Out of 428 million AT&T shares that could have been exchanged through the offer, only 373 million were exchanged.

Peter Friedland, wireless analyst with WR Hambrecht, believes most investors held on to their AT&T shares knowing they’d receive a large distribution of wireless shares in a stock dividend by the middle of the year.

“Investors apparently are more interested in owning a more diversified basket of telecom assets,” Friedland wrote in a recent report.

Other wireless analysts say they continue to have concerns over the carrier’s large investments in next-generation technology. AT&T Wireless is working aggressively to launch GSM/GPRS service to 40% of its covered population by the end of the year. And the carrier’s aggressive move toward targeting less profitable prepaid customers is another fundamental concern, said Prudential analyst Chris Larsen.

In all, AT&T plans to issue about 1.16 billion wireless shares.