As announced in July 2013,
) has finally closed the Leap Wireless International Inc.
acquisition for $1.2 billion. The company acquired Leap's
Wireless properties like licenses, network assets, retail stores
and subscribers along with its stocks.
While AT&T acquired full right over Leap, it offered
contingent right to Leap shareholders that allows them to
gain from the sale of 700 MHz "A Block" spectrum of the latter.
The spectrum was purchased by Leap in 2012.
We believe this takeover will be a value addition for
AT&T, fortifying its position in the wireless industry
against top players like
Verizon Communications Inc.
T-Mobile US, Inc.
This acquisition will give AT&T control over Leap's
spectrum in the PCS and AWS bands covering 138 million people,
thereby enhancing the spectrum base of the former. In addition,
AT&T will also benefit from more customer care service
facilities, low-cost data plans and robust financial resources.
Further, the deal will endow AT&T with a stronger pre-paid
business line with the incorporation of the Cricket brand.
According to a press release, AT&T will integrate Cricket
with its existing operations to form a no-contract segment
offering low-cost rate plans, smartphones and a strong network
experience from AT&T. The new Cricket will leverage
from AT&T's nationwide 4G LTE network covering nearly 280
million people, while AT&T will benefit from Cricket's
distribution channels and additional markets.
AT&T expects customer migration to Cricket to take
approximately 18 months after the launch of the new brand.
This is AT&T's second attempt in the last two years to
acquire a wireless carrier. In 2011, the company was mulling over
buying T-Mobile USA for $39 billion. However, the deal failed to
materialize due to disapproval by the U.S. regulators.
Acquisitions and mergers seem to be the trend in the telecom
industry. In May 2013, T-Mobile USA acquired MetroPCS
Communications Inc, while in early July 2013 Sprint Nextel Corp.
and Japanese telecom company SoftBank announced the successful
completion of their merger.
AT&T currently holds a Zacks Rank #3 (Hold).
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