UBS Warburg said in research note Tues. that if Cingular and Voic...

in early talks with Cingular about possible merger. On regulatory front, brokerage said first merger application made after FCC’s wireless spectrum capped sunsets in Jan. was likely to pass antitrust review more easily than subsequent requests. “Moving from 6 carriers to 5 is simply not as big of a loss to the competitive landscape as a move from 5 to 4,” firm said. “At a certain point, consumer advocates will call into question the point of the original PCS auctions should industry consolidation get taken too far.” UBS Warburg said it expected FCC would adopt procedures and rules for evaluating wireless mergers that were similar to those in place at Justice Dept. It said it expected rules to be “issue-oriented and less formulaic in nature.” Point will be to focus on maintaining wireless competition in market, note said. Report said with one fewer competitor, customer turnover or “churn” rates would be expected to decrease industrywide. UBS Warburg said that with one fewer rivals, remaining carriers also would have to spend less on advertising to keep high profile in industry. It estimated national operators spend $50 to $75 per gross subscriber addition for ads and promotions. “However, we believe advertising spending on an absolute dollar basis could decrease as a result of consolidation, because less spending will be required to advertise one brand versus 2,” report said. Wireless consolidation could yield capital expenditure savings, UBS Warburg said, citing areas such as capacity additions, footprint expansions, network upgrades. In market such as Boston, VoiceStream and Cingular have networks, although Cingular “may be hitting capacity limits in the market” given its high penetration rate because it was incumbent operator. Cingular also will have to carve out more spectrum to overlay its TDMA network with GSM, note said. VoiceStream has excess capacity in that market because it is new operator with all-digital network, firm said. “A combination would save Cingular the trouble of upgrading its network to GSM since VoiceStream already deployed the technology.”