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FCC Green-Lights AT&T's Leap Buy

Sarah Thomas
3/13/2014
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The FCC has officially cleared the path for AT&T to acquire Leap Wireless, noting that concessions the carrier has made are enough to satisfy any public interest concerns.

AT&T Inc. (NYSE: T) announced its intent to acquire Leap Wireless International Inc. (Nasdaq: LEAP), which operates the Cricket Communications Inc. brand, in July of last year. The $1.19 billion deal earned Federal Communications Commission (FCC) approval Thursday evening. (See AT&T to Acquire Leap Wireless for $1.19B.)

The FCC found that the "public interest benefits of the proposed transaction outweigh the likelihood of significant public interest harms, such that overall, the proposed transaction is in the public interest." It didn't come without conditions, however.

AT&T has to divest spectrum in certain markets, as well as agreeing to begin deploying LTE using Leap's spectrum within 90 days to 12 months of closing -- and within 18 months in six specific markets in south Texas where Leap had a big swatch of customers. It also has to maintain Leap's CDMA roaming agreements as long as it keeps the network around. (See AT&T Plans a Prepaid Cricket Attack.)

The FCC is also requiring AT&T to continue to offer rate plans targeted at value-conscious and Lifeline customers, as well as to provide it with quarterly updates on how it's meeting the conditions and the migration of Leap customers.

AT&T gains nearly 5 million new prepaid customers through the deal, but, more importantly, it gets access to Leap's spectrum, including its complementary PCS and AWS holdings and an LTE network that covers 21 million people.

— Sarah Reedy, Senior Editor, Light Reading

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kq4ym
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kq4ym,
User Rank: Light Sabre
3/17/2014 | 10:07:08 AM
Re: "Public interest benefits."
Those public interest benefits are sometime more in the minds of the attorney's making clever presentations before the FCC than actual benefits. Only time will tell whethere AT&T's of 21 million customers will ultimately provice some added benefits to the public and customers. The FCC did mandate carrying out the service to value customers and Lifeline subscribers which gives bargain rates to low income folks. Just how many this might serve is open to question.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
3/14/2014 | 4:55:11 PM
Re: "Public interest benefits."
Faster access to LTE in Cricket's markets, which AT&T pledged to upgrade in the coming weeks. A larger network for AT&T customers and more prepaid choices. Because Cricket was small in size and relatively targeted in certain markets, they didn't see it taking out a competitor as much as, say, Sprint acquiring T-Mobile would be.
Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
3/14/2014 | 4:52:01 PM
"Public interest benefits."
Does the FCC say what those "public interest benefits" are?
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
3/14/2014 | 9:30:03 AM
Done deal
Well, that was quick -- AT&T closed the deal today, less than a day after getting FCC approval. AT&T and Leap's boards actually both approved awhile back.

The "New Cricket" is coming soon, and AT&T says it has big plans to shake up the prepaid market.
MarkC73
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MarkC73,
User Rank: Light Sabre
3/14/2014 | 8:52:28 AM
Re: M&A in the USA
I agree, it will be interesting to see what happens, the wireless market has always been 'competitive' (from a carrier perspective not necessarily a price and service perspective).  Prepaid still has a lot of potential.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
3/13/2014 | 6:25:53 PM
M&A in the USA
I don't think T-Mo and Sprint should feel encouraged by this. It's a much different size and scope.

I am interested to see what kind of splash AT&T makes in prepaid now.
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