Cingular's strong growth in prepaid customers helped cover up a sequential slowdown in conventional subscriber gains. Thanks to reseller partners that sell Cingular wireless service to pay-as-you-go customers under brands such as Tracfone, Cingular was able to count 2.4 million net new users in the fourth quarter. Cingular is the wireless unit of AT&T ( T) and is in the process of changing its name to AT&T. But buried in that figure is Cingular's soft postpaid subscriber growth. The Atlanta-based company added about 861,000 users in the quarter, which is down sequentially for the second quarter in a row. In the third quarter, Cingular had 928,000 net new postpaid subscribers. Analysts had been looking for postpaid subscriber additions to be above 900,000. Wall Street prefers postpaid subscribers because they are more profitable and, in part due to contracts, less apt to defect to competing services. The numbers point to a significant slip in market share at Cingular. Rival Verizon Wireless, the big U.S. joint venture of Verizon ( VZ) and Vodafone ( VOD), has been adding nearly 2 million postpaid customers a quarter. Industry watchers say that unlike Verizon Wireless, Cingular has failed to take advantage of massive subscriber defections from No. 3 mobile phone service Sprint ( S). On a conference call with analysts Wednesday, Cingular CEO Stan Sigman said there has been "some slowdown in postpaid, but I expect good growth going forward."
Even though AT&T tried a last-minute bribe of promising 5,000 new U.S. jobs to help gain support for the deal, the Justice Department filed a complaint to fight the combination of the nation's No. 2 and No. 4 wireless carriers.