Offer comes as nearly 100-percent premium over stock valuation; PCS and AWS spectrum in play

AT&T and has just announced that it has entered an agreement to buy regional carrier Leap Wireless  for $15 per share in cash, gaining all of the carrier's assets and customers. Leap, which operates a consumer-facing carrier as Cricket Wireless, has both a CDMA and LTE network with coverage in 35 states and approximately 5 million subscribers.

AT&T makes no indication that it will continue to operate the CDMA network, however, and says that it will keep the Cricket brand running but offer users access to its own GSM and LTE networks instead. It will retain all of Cricket's retail locations, and use the brand as a way for AT&T to further push into the low-cost prepaid market.

The other likely reason for this purchase is for Leap's spectrum holdings, which land in the PCS and AWS bands covering 137 million people. This spectrum matches up well to AT&T's current spectrum holdings, and should be quickly implemented with its current network.

The offer of $15 per share is nearly double the day's closing stock price of $7.98, a deal that no shareholders are likely to take issue with. Given that Leap currently has about $2.8 billion in net debt on its books, this deal highlights the value AT&T places on these spectrum holdings and retail locations. In all, this seems to be a smart move for AT&T in terms of customers and spectrum holdings. 

Source: AT&T


Reader comments

AT&T agrees to buy Leap Wireless for $15 per share


Noooooooooo T-Mobile needs to buy it, Att already has enough spectrum! I hope to god the FCC brings down the monopolistic hammer/unfair practices on this.

T-Mobile needs to pick up the pace and some buy spectrum or else they will become congested and slow. :/

Doesn't really help you too much. It means higher prices for everyone. Even with more att has proven they can screw their customer even more.

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My bill from att isn't all that high yet. Plus you always have prepaid as another option!

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ATT likes to own spectrum and never utilize it. That was one of the reasons TMobile and ATT didn't get the FCC blessing their merger.

The govt needs to take over the spectrum and lease it out fairly.
I can't believe I'm saying this but its one of the few areas I think govt should have control.

The question is, how would the government dish out the spectrum pie? Customers? network build out? Anyway you slice it, ATT, VZW would get the lions share

Who do you think controls the spectrum to begin with? The government doesn't care who uses what as long as they get the leasing fees and no one has an overly unfair advantage.

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Lol. The government should control it. Like they do with medicare? They can't control anything.

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This does suck,and tMobile does need to pick up the pace.. Kinda wish DISH would just buy up Tmobile, and get aggressive! or atleast join up.

However, ATT is not, in anyway a monopoly. they're still #2 compared to VZW who is the real Ma Bell Tyrant (Yes, VZ is a baby bell...)

Give this 20-30% chance of passing the FCC/FTC without MAJOR concessions. Leep going away would not have been as bad as TM but the FTC is already grumpy at ATT and Verizon for having so much market/spectrum.

Considering the price per share that AT&T paid, this sounds to me like a rushed chess move by AT&T to prevent T-Mobile from purchasing another regional carrier and thus growing further. Now let's see if they can make this beneficial and profitable without destroying the Cricket name.

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Good. Convert Cricket from CMDA to GSM. Verizon and Sprint are supposedly making the move in the next year or two.

Verizon isn't ever switching to GSM, and has committed to offering CDMA 3G till at least 2020 or later I believe, and longer for businesses and governments.

Sure they may start offering some VoLTE and LTE-only devices, but CDMA is going to be around a long long time.

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Tmobile does not need anymore spectrum until the 600 MHz spectrum is available, and then they will need as much as they can possibly afford. Now Tmobile needs to upgrade all of their towers, like Sprint, to HSPA+ and LTE. Even if they upgrade their current towers in rural areas without building new towers, people will join and enjoy better service. EDGE IS THE PROBLEM! Verizon and AT&T do not cover every area completely but the areas that are covered are 3G/4G, NOT 2G. Tmobile is using their high frequency bands as an excuse not to upgrade their 2G areas. THAT IS WRONG!