Cingular leads race for AT&T Wireless

VODAFONE faces stiff resistance from US cellphone operator Cingular in the £16bn race for AT&T Wireless.

As tomorrow's bid deadline approaches, Cingular, which has put in an unofficial offer of more than $30bn (£16bn), is the front runner among Wall Street analysts.

The second-largest cellphone operator in the US has also won the support of a key union. 'This is the only potential merger that creates the necessary scale to compete in the US wireless marketplace,' Communication Workers of America president Morton Bahr said.

The union added that Cingular and AT&T Wireless was 'an excellent match that will benefit shareholders of both companies'.

The uncertainty surrounding Vodafone's intentions - it has yet to table a bid and never formally confirmed its interest - is likely to further unsettle shareholders. The shares have fallen more than 10% since rumours of a bid surfaced last week.

Vodafone is assuring investors it has sorted out tax problems associated with selling its 45% stake in Verizon Wireless, worth about $20bn. Analysts feared the sale could attract tax of up to $5bn, but Vodafone says this is exaggerated.