AT&T Plans To Acquire Leap Wireless (Cricket) For $1.2 Billion

Subject: Editorial, General Tech | July 13, 2013 - 07:24 PM |
Tagged: wireless, spectrum, leap wireless, cricket, AT&T, acquisition, 4g lte

AT&T Plans To Acquire Leap Wireless (Cricket)

In a counter move to the SoftBank-Sprint-Clearwire merger, AT&T has announced its intentions to buy out Leap Wireless and its Cricket pre-paid cell service brand. AT&T will pay as much as $15 per share, which amounts to a bit under $1.19 billion (79.05 million outstanding shares at $15 per share). Before the announcement, Leap Wireless was trading at less than $8, so the bid is fairly generous. So far, approximately 30% of shareholders have voted to accept the buyout offer.

In the buyout deal, AT&T will acquire Leap Wireless, its Cricket brand in the US, licenses, spectrum, Cricket brand, 3,400 employees, and its retail locations. Cricket currently has a 3G CDMA network and is rolling out a 4G network. The company has about 5 million subscribers. AT&T will get to add a bit more spectrum to its portfolio in the PCS and AWS bands. This spectrum held by Leap Wireless is reportedly complementary to AT&T’s existing licenses.

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Interestingly Leap Wireless is not doing very well, and has about $2.8 billion in net debt, and its Cricket service is loosing subscribers. AT&T would also have to assume that debt. Cricket offers up unlimited plans that include unlimited voice calls, texting, and data. AT&T has stated that it would assume control of and maintain the Cricket brand. It will continue to offer service to existing Cricket customers and would also offer up its own 4G LTE network for use by Cricket pre-paid plans (phone hardware permitting). AT&T stated in a press release that it intends to use the Leap Wireless acquisition to “jump start AT&T’s expansion into the highly competitive prepaid segment.”

The buyout deal will need to be approved by Leap Wireless as well as by the US Department of Justice and FCC. If it successfully passes through the various regulatory bodies, AT&T expects the deal to close within the next six to nine months.

Personally, I have my doubts that AT&T will continue to maintain the Cricket service as is, especially when it comes to unlimited data. As far as its pre-paid expansion, it at least tried to go down this path before with its line of Go phones. I believe that this deal is mostly about padding out AT&T’s spectrum portfolio in a bid to head off Sprint, and maintain its position against T-Mobile and Verizon. The MVNO and pre-paid market is certainly growing and AT&T is going to want a piece of that market, but I also think that the last thing AT&T wants to do is cannibalize its own contract offerings by offering up a similar pre-paid service with unlimited everything for half the price. Sure, AT&T will take it versus getting nothing, but the company is going to have a hard time balancing both offerings in a way that does not negatively effect one or both of its pre-paid and post paid services.

What do you think about the deal, is this a good thing for Cricket customers? Is AT&T serious about wanting to jump into the pre-paid market?

Source: AT&T

July 17, 2013 | 03:01 AM - Posted by thinkbiggar (not verified)

So AT&T wants to buy a 4G LTE company. I feel like Luke Skywalker seeing the death star for the first time as Darth tells Luke the death star is simply a refugee center for people fleeing dying planets.

So they want to take on 2.8 billion in debt so they can offer pay as you go phones. Really, why is AT&T buying this company?

My guess would be to keep people from having solid options for inexpensive phone plans. These pesky plans are preventing AT&T from reaching deeper into your pockets. Also the deadbeats that run to Cricket when they bail on AT&T after sitting on hold for 30 hours to resolve billing issues will have no place to run because they bailed on Verizon last year as well. Also Cricket lets you bring in your craigslist phone and start service without getting a shocking $1000 phone bill because your kid likes to text message. How can AT&T sell you a used phone for $500 when it is on Craigslist for $80.

I had a Altel phone with Verizon software on Cricket. Innovation(hacking) like that doesn't make AT&T richer.

In reality since there is no chance of a tmobile merger and with Crickets metropolitan reach AT&T is doing this to crush competition. Plain and simple. The death star.

January 28, 2014 | 08:29 PM - Posted by Anonymous (not verified)

Greedy Bastids!

January 27, 2015 | 09:13 AM - Posted by Shashank (not verified)

Very nice article & an informative one!

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