As AT&T Wireless ( AWE) packs for its Cingular journey, investors are fretting that many subscribers won't come along for the ride.

AT&T Wireless, the No. 3 U.S. cell-phone service provider, has spent the last year stumbling in spite of the industry's record-breaking growth spurt. The company's many mishaps -- ranging from poor service quality and software glitches to the onset of number portability -- finally drove it this winter into the arms of a highly motivated buyer, No. 2 wireless power Cingular.

But Wall Street analysts say the bleeding is far from over at AT&T Wireless. In fact, some expect the Redmond, Wash., company to suffer an almost unheard-of setback when it reports earnings on April 28. These skeptics estimate that AT&T Wireless will lose between 50,000 and 200,000 customers in its first quarter ended last month.

A decline wouldn't just end a decade of consistent growth at AT&T Wireless and brand the company as the only major player losing subscribers. Some bears speculate that a growing torrent of customer losses could even force Cingular to re-evaluate the terms of its $41 billion bid for the company, which is due to close at year-end.

"I think people have some doubts about the timing, and some possibility of the merger not getting done," says Deutsche Bank analyst Viktor Shvets, who has a hold rating on AT&T Wireless. Deutsche Bank has been an underwriter for the company.

Wishy Washy

The prospect of a Cingular-AT&T Wireless breakup appears remote. Shvets thinks the deal will go through, barring "something extraordinary." Other analysts agree it would take nothing short of a disaster to derail the deal.

Even so, judging by AT&T Wireless' stock price, investors haven't exactly given the pact a full vote of confidence.

On Feb. 17, Cingular, a joint venture of SBC ( SBC) and BellSouth ( BLS), agreed to pay $15 in cash for each share of AT&T Wireless. Typically, an all-cash bid from a financially sound company such as Cingular would push shares of the acquisition target close to the merger price. But AT&T Wireless shares never exceeded $14.10 and have mostly traded in the high $13 range. On Thursday, AT&T Wireless slipped 8 cents to $13.64.

In addition to the worsening business conditions at AT&T Wireless, other concerns that could disrupt or delay the merger include the standard regulatory reviews and antitrust scrutiny.

But analysts and investors are focusing on the prospect of dramatic subscriber losses. Some say defections on the order of 10% to 20% could prove substantial enough to cause the deal some trouble.

A representative from AT&T Wireless and Cingular said there's no specific provision in the merger agreement governing a change in terms based on subscriber losses.

Slippery Slope

But it's clear that AT&T Wireless is on the wrong end of the wireless industry's momentum right now, and some analysts don't see any catalyst for change. The company's rate of monthly customer defections reached 3.3% at the end of 2003, and the exits don't look to be getting any less crowded.

"It's probably not realistic to expect churn will get better, since they are not investing in things like network improvements that would reduce churn," American Technology Research analyst Albert Lin says of AT&T Wireless. "And all their aggressive promotions to get higher gross subscriber adds have been matched by other carriers."

The AT&T representative couldn't comment on subscriber numbers ahead of the earnings report, but said the company has been sticking with its network upgrade plan.

"Cingular is just hoping that AT&T Wireless runs a decent business, but I think they will be surprised at how badly things are going for AT&T," says Lin, who has a sell rating on the stock.

By adding AT&T Wireless' network, Cingular can go a long way toward completing its national coverage map and address its increasing wireless spectrum needs.

"Cingular is so motivated, they are probably willing to overpay," says Lin.