Ugh, that is extremely rude. I love texting, but not at the expense of a face-to-face encounter.
I used to have a friend who would have extensive conversations with her roommates while on the phone with me. She wouldn't even say "hold on" or "can I call you back?" I would actually be mid-sentence before hearing her talking to her roommates--and it wasn't anything important. Just "hello, how was your day" kind of chitchat. It made me so angry.
She would also sometimes turn on the TV while on the phone, and get completely sucked in, ignoring me completely.
Unsurprisingly, we eventually had a falling out for other reasons, but we have since reconciled and it hasn't happened since. I guess she finally realized how obnoxious she was being.
What I hate about this kind of behavior is the implication that you simply not interesting enough to be worth the other person's full attention. I would have been tempted to just get up and leave.