AT&T has announced plans to acquire prepaid wireless provider Leap Wireless in a move AT&T said will help grow its 4G LTE deployments and better support the growing number of Internet-enabled devices tapping into its network.
AT&T said it will pay $15 a share, or roughly $1.2 billion, for the San Diego-based Leap Wireless. AT&T will acquire all of Leap's stock and wireless properties, including its network assets, retail stores and approximately five million subscribers, AT&T said.
Leap, which is best known for its "Cricket" wireless brand, offers prepaid wireless plans, where users can pay on a monthly basis but aren't locked into formal contracts. AT&T said Leap currently operates both a 3G and 4G LTE network, and covers a total of 96 million users in 35 U.S. states.
AT&T said it will retain the Cricket brand, but offer Cricket customers access to its own 4G network.
"Cricket’s employees, operations and distribution will jump-start AT&T's expansion into the highly competitive prepaid segment," said AT&T spokesperson Brad Burns in a statement provided to CRN.
The acquisition also will allow AT&T to tap into what it called Leap's unused wireless spectrum, meaning the radio frequency or airwaves that mobile operators need to transmit their wireless signals. Acquiring additional spectrum has become a priority for carriers in recent years, given the proliferation of data-hungry smartphones and tablets running on their networks.
According to research from Gartner, mobile connections are expected to grow at a compound annual rate of 6.2 percent in North America through 2017, representing an additional 27.4 million new connections a year.
"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," Bill Menezes, principal research analyst at Gartner, told CRN in an email. "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."
AT&T said Leap's spectrum covers 137 million users, and is "largely complementary" to its existing spectrum licenses.
AT&T's acquisition of Leap is expected to close within the next six to nine months, and is subject to review by both the Federal Communications Commission and the Department of Justice. In 2011, federal regulators shot down AT&T's proposed $39 billion buyout of rival carrier T-Mobile, claiming the deal would stifle fair competition in the carrier market.
T-Mobile merged instead with fellow U.S. carrier MetroPCS earlier this year.
PUBLISHED JULY 15, 2013