AT&T Inc. says it is splashing down US$1.19 billion to acquire Leap Wireless as a way to get much-needed spectrum, bolster its prepaid play and expand its reach. But there's a nice side effect of the deal, too: AT&T gets to give a big middle finger to its ex, T-Mobile US. (See AT&T to Acquire Leap Wireless for $1.19B.)

It's not hard to see why the carrier might be feeling a little bitter after its deal to acquire T-Mobile went up in smoke two years ago. Since then, T-Mobile, under the leadership of new CEO John Legere, has been running around town trashing its would-be partner and its network to everyone that will listen.

Now it appears AT&T is getting a little revenge by announcing its intention to buy up Leap Wireless, a carrier that T-Mobile was reportedly eyeing for its own acquisition.

Of course, this isn't the reason AT&T cited for the buy at all. And its reasoning for wanting Leap is quite valid. The smaller operator gives it complementary spectrum for its LTE rollout and has a sizable customer base in the prepaid market, which AT&T has been bolstering its presence in recently. (See AT&T Nudges Prepaid Customers to LTE and AT&T Updates GoPhone Prepaid LTE Plans.)

But industry analyst Craig Moffett pokes some holes in AT&T's logic. He points out in a research note that not only is Leap's spectrum portfolio small and concentrated in Tier 2 markets, but it also isn't all that compatible with AT&T's since more than two-thirds of it is in the AWS band. AT&T gave up most of its AWS holdings to T-Mobile in the breakup and to Verizon Wireless in a January deal.

Instead, he writes, "AT&T's purchase of Leap keeps Leap's highly complementary spectrum out of T-Mobile's hands, where it might otherwise have been put to use, and it blunts the impact of T-Mobile's initiatives to expand the MetroPCS brand into additional markets."

Leap's spectrum would have meant a lot more to T-Mobile than it does to AT&T, and that's one reason AT&T had to get there first. (Although, it's worth noting that this might not be the end of the story for Leap as T-Mobile could still respond with a counter-bid of its own. Remember how well that worked out for Dish Network Corp.?)

In my opinion, spectrum and prepaid were both very real motivators of AT&T's acquisition as postpaid growth and capacity continue to be an issue for the number two wireless operator. But, I'm sure T-Mobile factored into its decision, and the bid suggests that Magenta's "uncarrier" strategy is actually making its bigger competitors a little nervous -- or at least mad enough to strike back.

— Sarah Reedy, Senior Editor, Light Reading