AT&T to Buy Leap Wireless for About $1.2 Billion
AT&T Inc. said Friday that it has agreed to acquire Leap Wireless International Inc., the pre-paid cellphone carrier that operates under the Cricket brand, for about $1.19 billion in cash, or $15 a share.
The purchase gives the nation’s No. 2 cellphone carrier a leg-up in serving customers who prefer not to have lengthy contracts. Leap’s Cricket service has 5 million subscribers who pay monthly without a contract. The deal also gives AT&T the right to use Leap’s unused airwaves - also known as spectrum - to expand its network.
Spectrum is the lifeblood of the wireless industry and the fight to grab more of it has spurred a recent wave of consolidation.
In April, No. 4 T-Mobile completed its acquisition of pre-paid carrier MetroPCS. The company plans to shut down the MetroPCS network in two years, so it can use the airwaves to improve coverage and data speeds. On Wednesday, Japan’s SoftBank Corp. completed its $21.6 billion takeover of No. 3 Sprint Corp, which helped Sprint acquire Clearwire Corp. and its spectrum holdings a day earlier.
Charles Golvin, a technology analyst with research firm Forrester, said Leap’s spectrum holdings will allow AT&T to offer more of its customers faster, more reliable wireless data in congested areas.
"Having more spectrum means having more capacity and being able to meet those long-term data demands," Golvin said. "Just like you can never be too thin or too pretty, you can never have too much spectrum."
As part of its deal, AT&T plans to keep the Cricket brand name, but provide Cricket customers with a broader range of devices and give them access to AT&T’s "4G LTE" high-speed wireless network. AT&T says it plans to expand Cricket’s presence in the U.S.
As of March, AT&T had 7.1 million pre-paid customers through its GoPhone and Aio brands. AT&T has 107 million wireless customers in total.
"The pre-paid market for us is relatively untapped," said AT&T spokesman Brad Burns. "From a competition perspective, this creates a much healthier competitor in the pre-paid space."
AT&T will buy all of Leap’s stock and wireless properties, including licenses, network and retail stores. Leap’s unused spectrum covers portions of the country that include 41 million people.
The companies said owners of nearly 30 percent of Leap shares have agreed to vote in favor of the deal.