AT&T Set to Acquire Leap Wireless

Wireless provider Leap Wireless is set to be purchased by AT&T, which will mean that the latter can develop its 4G LTE deployments and provide more support to the increasing number of Internet-enabled devices using its network.

$15 a share ($1.2 billion) will be paid by AT&T in the acquisition of San Diego, California-based Lear Wireless. All of Leap's stock and wireless properties, such as its network assets, retail stores and five million subscribers will be included in the purchase.

The "Cricket" wireless brand is the best known aspect of Leap, and this provides prepaid wireless plans through which users are able to pay on a monthly basis, yet are not tied to formal contracts. A 3G and 4G LTE network are at present run by Leap, according to AT&T, and has 96 million users within 35 U.S. states.

The Cricket brand will be kept by AT&T, but customers will be offered access to its own 4G network.

A spokesperson from AT&T, Brad Burns, said: "Cricket's employees, operations and distribution will jump-start AT&T's expansion into the highly competitive prepaid segment."

AT&T will be able to make use of Leap's unused wireless spectrum, and this is the radio frequency or airwaves that mobile operators need to transmit their wireless signals. The extra spectrum has become more valuable to carriers over the last few years, particularly as smartphones and tablets running on their networks are data-hungry.

A Gartner report shows that mobile connections through 2017 will increase at a compound annual rate of 6.2 percent in North America, and this represents an additional 27.4 million new connections per year.

The principal research analyst at Gartner, Bill Menezes, commented: "AT&T's purchase of Leap reflects the late stages of what amounts to a land rush for the cellular spectrum carriers need to support their still-growing mobile data businesses. Spectrum is a finite resource and the fastest way to get your hands on it is with an acquisition like this one, or like the spectrum buy Verizon made from Comcast, Time Warner and other major cable companies two years ago."

137 million users are covered by the combined AT&T and Leap spectrum, and this is "largely complementary" to its existing spectrum licenses.

The acquisition will be closed in the next six to nine months, and is subject to review by the Federal Communications Commission and the Department of Justice. AT&T's proposed buyout of rival carrier T-Mobile for $39 billion in 2011 was rejected by regulators as the deal would have stifled fair competition in the carrier market. T-Mobile and MetroPCS merged instead, earlier this year. (CY)Link