Cricket Communication, a wholly owned subsidiary of
Leap Wireless International Inc.
(
LEAP
), has launched its nationwide Cricket monthly voice products in
more than 1,200 stores of retailer Kmart across the nation. We see
this as an attempt by the prepaid service provider to increase its
retail presence in order to improve the accessibility of Cricket's
products and service.
According to the agreement, two smartphones and two feature
phones will be available from Kmart stores. Samsung's Vitality and
ZTE's Score are the two smartphones which would feature Cricket's
popular Muve Music Service and will be available at $199.99 and
$129.99, respectively. The two feature phones include Samsung's
Chrono and Huawei's Pillar and will be available for $39.99 and
$69.99, respectively.
The rate plan for smartphones with Muve Music is $55 per month
and offers Kmart customers a combined package of voice, data, video
and text coupled with unlimited music and ringtone downloads on the
nationwide 3G network of Leap Wireless.
The feature phones will be available in Kmart stores under
Cricket's PAYgo service plan, which is priced at $25 per month,
providing unlimited access to mobile web in addition to 300 free
voice minutes. Muve Music Service is one of the prime reasons for
Cricket's success and the above mentioned agreement will further
help the company to lure in more music loving customers from
different locations.
Leap Wireless's agreement with Kmart is the second of its kind
this year after the company decided to launch its voice products in
1,600 stores owned by
RadioShack Corp
(
RSH
).
Furthermore, in a major strategic move, Leap wireless became the
first company to offer
Apple Inc's
(
AAPL
) iPhone 4 and iPhone 4S smartphones to its subscribers on a no
contract basis, which we believe is a 50-50 opportunity for the
company, because in spite of having a competitive pricing advantage
over the postpaid carriers, it has to pay huge subsidies to
Apple.
However, we remain optimistic that both the prepaid iPhone
launch and the company's attempts to increase its retail presence
will strengthen its position as one of the best prepaid service
providers in the U.S.
Recommendation:
We are maintaining our long-term Neutral recommendation on Leap
Wireless International. Currently, Leap Wireless International has
a Zacks #3 Rank, implying a short-term Hold rating on the
stock.
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