Customers Boot AT&T Wireless

Hello? Are you there?

Uh, apparently not. Customers have been disconnecting AT&T Wireless (NYSE: AWE  ) in favor of rivals like Verizon (NYSE: VZ  ) and Deutsche Telekom's (NYSE: DT  ) T-Mobile in massive numbers lately. The company, which is in the process of being acquired by Cingular (a joint venture of BellSouth (NYSE: BLS  ) and SBC Communications (NYSE: SBC  ) ) reported in its earnings preview last month that it lost 367,000 subscribers during the first quarter. Yesterday, we found out why.

A report from Consumers Union, a consumer advocate group that publishes the popular Consumer Reports magazine, said that mobile phone users lodged more complaints about AT&T Wireless than any other mobile carrier. Sprint (NYSE: FON  ) had the second most complaints, followed by T-Mobile, Cingular, Nextel Communications (Nasdaq: NXTL  ) , and Verizon.

The report, which was based on figures obtained through the Federal Communications Commission, cited problems with number portability as a key complaint with AT&T Wireless. For its part, the company has also cited issues with its information technology and billing systems as fueling subscriber defections. This last point makes sense to me. I wrote not long ago that I had switched from AT&T Wireless to T-Mobile in large part because I couldn't get a deal to bundle phone and Wi-Fi service on the same bill.

No matter the reasons, the fact remains that AT&T Wireless is losing loads of customers, and that means lost revenue for acquirer Cingular. Worse, the nearly endless stream of bad news suggests Cingular will have to spend dearly to fix AT&T Wireless' problems, likely starting with a major overhaul of the two firms' IT infrastructures.

In paying $41 billion in cash after a much-hyped bidding war, Cingular gushed like a newlywed about its spouse-to-be. Now that the two are moving in together, Cingular could become dismayed with the mess of bonbon wrappers and cookie crumbs its sweetheart leaves around the house. Still, with a little counseling, and maybe a team of maids, this couple will get to the altar later this year as planned. Just don't expect a lot of customers to attend the wedding.

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Fool contributor Tim Beyers was an AT&T Wireless customer for six years. He has no stake in any of the companies mentioned, and you can view his Fool profile here.


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