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AT&T to Acquire Leap Wireless for $1.19B

Sarah Reedy
LR Mobile News Analysis
Sarah Reedy, Senior Editor
7/12/2013
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AT&T has agreed to acquire prepaid operator Leap Wireless for $15 per share or around $1.19 billion.

The U.S.'s second-largest wireless operator announced the deal late Friday, noting that it will acquire the entirety of Leap's stock and wireless properties, including licenses, network assets, retail stores and its 5 million subscribers. AT&T will also be acquiring Leap's $2.8 billion of net debt and the net proceeds from the sale of its 700MHz A block spectrum in Chicago, which it purchased in August of 2012 for $204 million.

The main attraction for AT&T was likely Leap's spectrum holdings. The contract-free provider operates a 3G CDMA network and an LTE network covering 21 million people in the U.S. It holds complementary spectrum in both the PCS and AWS bands reaching 137 million people. AT&T plans to put the spectrum to use as soon as the deal closes.

"Immediately after approval of the transaction, AT&T plans to put Leap's unutilized spectrum -- which covers 41 million people -- to use in furthering its 4G LTE deployment and providing additional capacity and enhanced network performance for customers' growing mobile Internet usage," a press release on the deal notes.

AT&T says it will retain the name Cricket, Leap's consumer-facing brand, and tap into its distribution channels as it plans to use the acquisition to shore up its presence in the prepaid market.

The deal will have to pass regulatory approval in the U.S., something AT&T didn't manage when it attempted to acquire T-Mobile US in 2011. AT&T says that owners of nearly 30 percent of Leap's outstanding shares have agreed to vote in favor of the transaction. It expects the deal to close in six to nine months.

— Sarah Reedy, Senior Editor, Light Reading

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SarahReedy
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SarahReedy,
User Rank: Blogger
7/15/2013 | 2:02:44 PM
re: AT&T to Acquire Leap Wireless for $1.19B
My guess is that the US regulators will see AT&T's buy of Leap as a spectrum purchase more so than the combining of two competitors. In that respect, it's akin to Verizon's cable SpectrumCo deal, and it should be easier to get approval than it was with T-Mobile.

What this means for competition and pricing, however, remains to be played out. The LTE data price war that T-Mobile and Sprint are already kickstarting could end up being good for consumers.
SarahReedy
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SarahReedy,
User Rank: Blogger
7/15/2013 | 2:00:41 PM
re: AT&T to Acquire Leap Wireless for $1.19B
If they are not acquired, it will be very hard for them to compete, I imagine. The market is bifurcating between the high end and the low end where a lot of these new value-oriented MVNOs also are. Players like US Cellular that are stuck in the middle will be hurt the most.
DanJonesLRMobile
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DanJonesLRMobile,
User Rank: Light Beer
7/15/2013 | 12:54:00 PM
re: AT&T to Acquire Leap Wireless for $1.19B
Yeah lots of smaller buys could still happen.
DollarsnSense
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DollarsnSense,
User Rank: Light Beer
7/15/2013 | 12:38:38 PM
re: AT&T to Acquire Leap Wireless for $1.19B
I think the M&A activity in the telecom sector still has some legs. I expect US Cellular (USM), nTelos (NTLS) and C-Spire Wireless (privately held) to all be acquired in the next 36 months or so. Perhaps Atlantic Tele-Network (ATNI) as well.
Ray Le Maistre
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Ray Le Maistre,
User Rank: Light Sabre
7/15/2013 | 12:31:27 PM
re: AT&T to Acquire Leap Wireless for $1.19B
As an outsider looking in on the US comms services landscape, it seems there's a lot of service provider consolidation going on that's going to impact competition.... how much further can this M&A process go before the federal authorities call a halt?
milan03
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milan03,
User Rank: Light Sabre
7/12/2013 | 10:50:39 PM
re: AT&T to Acquire Leap Wireless for $1.19B
I'm thinking AT&T wanted to make an offer before T-Mobile and Sprint do the same. This doesn't mean the others won't bid.
SarahReedy
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SarahReedy,
User Rank: Blogger
7/12/2013 | 10:09:08 PM
re: AT&T to Acquire Leap Wireless for $1.19B
No kidding! I wonder how the FCC/DOJ will view this one. I think it'll be easier than with T-Mobile, but certainly not a sure thing.
DanJonesLRMobile
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DanJonesLRMobile,
User Rank: Light Beer
7/12/2013 | 10:03:10 PM
re: AT&T to Acquire Leap Wireless for $1.19B
Wow, never a dull moment, eh?
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