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AT&T: Look Before You Leap

5:40 PM -- Now that AT&T Inc. (NYSE: T) has revealed its willingness to buy up CDMA networks with the Verizon Wireless asset acquisition, there's speculation afoot about what Ma Bell could snap up next.

The Wall Street Journal's "Heard On The Street" blog is now reporting rumors of a possible Leap Wireless International Inc. (Nasdaq: LEAP) acquisition. There's a couple of reasons I could see this happening and a couple why it might not.

The reasons for it to happen are pretty obvious: AT&T gets more subscribers and more spectrum. In case you hadn't noticed, the largest GSM operator in the U.S. is in a race with Verizon Wireless to add more subscribers along with more radio capacity.

Both sit in a dominant position over the U.S. scene; both have large 3G networks already and are talking about moving to LTE mobile broadband in the next few years. Pretty much the only way for either to grow right now is to take out smaller competitors. A bonus from acquisition is that a buy-out would give AT&T more radio capacity.

Still, Leap tends to be a low-cost service provider with pay-as-you-go customers and cheap plans. So buying it might add more raw numbers but might not add the "higher-value" customers that all operators really desire.

Secondly, if the top two vendors on the U.S. cellular scene keep buying up smaller rivals, is that going to trigger antitrust laws at any point? We don't know yet, but its worth noting that Obama's antitrust regulator, assistant attorney general Christine Varney, has said that she will be taking a quite different approach from that of the previous administration.

— Dan Jones, Site Editor, Unstrung

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