US telecoms firm Cingular has beaten UK rival Vodafone in the brief but tense battle to take over AT&T Wireless.
Many investors were hoping Vodafone would fail
Cingular has agreed to pay $41bn (£22bn) for the US firm, some $3bn more than Vodafone reportedly offered.
Vodafone shares finished the day 4.5% higher, amid investor relief that the firm no longer risked overpaying in its quest for US market share.
At the final bell in New York, AT&T was up $1.96, or almost 17%, to $13.78, and was the most actively traded stock.
Some analysts had argued that AT&T Wireless was a closer strategic fit with Cingular than Vodafone.
But Cingular's joint owners posted losses; majority stakeholder SBC Communications down 41 cents to $24.64, and BellSouth was down 77 cents at $28.78.
Meanwhile Japanese mobile phone group NTT Docomo, which opted not to put forward a bid, will withdraw from
the US mobile market, Kyodo news agency reported.
It said the firm will sell its 16% stake in AT&T Wireless to US giant Cingular, citing Docomo company sources. The terms of sale with Cingular will be decided at a later date, the report said.
The combined Cingular/AT&T Wireless firm will have 46 million customers in 49 states, and annual revenues of
more than $32bn.
It will overtake Verizon Wireless - in which Vodafone has a 45% stake - as the US' biggest mobile phone operator.
"This combination is expected to create customer benefits and growth prospects neither company could have achieved on its own," said Stan Sigman, the president and chief executive of Cingular.
Details of the bidding process for AT&T Wireless are still shrouded in secrecy, although Vodafone now admits it put forward a bid on 9 February.
According to media reports, initial bids from both Cingular and Vodafone were rejected last week, but the firms submitted higher offers for AT&T Wireless to consider over the weekend.
With the US representing one of the few remaining sources of likely growth in the developed world, the market is crucial for firms with global ambitions.
The US mobile market is highly fragmented, and is believed to be on the brink of rapid consolidation.
Julian Hewitt at telecoms analysts Ovum, said: "We have long believed in consolidation in the US telecoms market.
"We can now expect Cingular / AT&T Wireless to become the consumer market powerhouse.
"The combined company will mean strong competition for T-Mobile, who sit uncomfortably between the two players.
"However, we expect that AT&T Wireless will continue to struggle to retain its business customers. We expect Verizon Wireless to continue to lead the business market, partly because of its new CDMA2000 high-speed data services."
Hilary Cook at Barclays Private Clients told the BBC's World Business Report that there was "huge relief from Vodafone's shareholders that it hasn't spent $40bn they would rather see returned to them."
The rationale for Vodafone's AT&T bid was that success would give it control of a US network operator, which it could rebrand as Vodafone.
AT&T Wireless also uses the same mobile phone technology as Vodafone - GSM.
Vodafone's existing joint venture with Verizon gives the UK firm none of those things.
News of the AT&T deal also sparked a 5% rise in the shares of conglomerate Vivendi, which is believed likely to face a bid from Vodafone to buy it out of their French joint venture SFR.
Some analysts say Vodafone will also consider a takeover attempt for all of Vivendi, in order to secure SFR.
Japanese carrier NTT Docomo, owner of a 16% stake in AT&T Wireless, earlier decided against bidding for the rest of the company.
Cingular is a 60:40 joint venture between US firms SBC Communications and BellSouth.