Cingular Wireless, the largest U.S. cellular operator, added 1.8 million subscribers in the fourth quarter, exceeding a notable gain that...

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Cingular Wireless, the largest U.S. cellular operator, added 1.8 million subscribers in the fourth quarter, exceeding a notable gain that former industry leader Verizon Wireless achieved in the previous quarter.

As it began integrating its operations with Redmond-based AT&T Wireless in the fourth quarter, Cingular reached 49.1 million subscribers nationwide.

That compares with the 42.1 million Verizon Wireless had at the end of the third quarter, when it recorded its best quarter ever, gaining 1.7 million subscribers.

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“We were extremely pleased with the number,” said Clay Owen, spokesman for Atlanta-based Cingular. “We think the advertising message of more bars in more places resonated with consumers and is a tangible result of the merger.” The ads explain how coverage has improved now that customers have access to both AT&T Wireless and Cingular networks.

The gains include subscriber additions at AT&T Wireless in the 25 days of the quarter that occurred before the merger closed Oct. 26. The numbers exclude markets Cingular sold as part of the deal.

Owen said not only did Cingular add subscribers, but managed to keep more customers from the merged company’s existing base than many predicted. Customer turnover, or “churn,” dropped from a combined total of 3.2 percent in the third quarter to 2.6 percent in the fourth.

“A lot of analysts said the AT&T Wireless customers would flee, but clearly they stayed with us. They found it was worth staying,” Owen said.

Although Cingular is not publicly traded, it released some financial information yesterday in advance of quarterly financial reports from its parent companies, SBC Communications and BellSouth.

In the fourth quarter, Cingular said it lost $497 million on revenue of $7.1 billion. For 2004, it reported profit of $226 million on revenue of $19.4 billion.

If Cingular included AT&T Wireless operations for the fourth quarter, the company said it would have recorded revenue of $8.1 billion. The reported quarterly loss included $415 million in expenses from the amortization of intangible assets, including the AT&T Wireless brand, which is set to return to AT&T Corp. after a grace period.

It also included direct merger-integration costs of $245 million, mainly attributable to advertising campaigns and the transformation of the AT&T Wireless stores over to Cingular.

To save costs after its $41 billion acquisition of AT&T Wireless, Cingular has said it expects to cut 10 percent of its 68,000 jobs.

To date, 243 positions have been eliminated in Washington, where AT&T Wireless previously employed 5,700 people. Cingular has not said how many positions have been eliminated nationwide.

Cingular said it expects to see operating margins improve this year as churn declines. It also expects to spend up to $7.2 billion on high-speed data upgrades to existing networks and new networks in California and Nevada.

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com