Two big questions about AT&T’s proposed pick-up of Leap

AT&T today said it has agreed to acquire Leap Wireless for $1.2 billion in addition to taking on Leap’s $2.8 billion in debt, amounting to a deal of roughly $4 billion. The nation’s second-largest carrier said it will Leap’s Cricket brand, which provides prepaid service to 5 million customers.

Leap has become perhaps the most attractive second-tier carrier following a flurry of consolidation that recently saw T-Mobile USA take over the prepaid operator MetroPCS. As my colleague Kevin Fitchard writes, the looming question about AT&T’s proposed deal is whether federal regulators approve it. AT&T claimed 27.9 percent of the U.S. smartphone market in the first quarter, second only to Verizon Wireless’s 37.2 percent, so picking up Leap would only cement what is often referred to as a duopoly.

But the move also is likely to have an impact on the Federal Communications Commission’s next spectrum auction, which will likely occur later this year or early in 2013. The deal is primarily about picking up Leap’s valuable spectrum, and the FCC is currently deciding whether to allow AT&T and Verizon to fully participate in the upcoming auction or to foster competition by favoring smaller carriers. If AT&T is allowed to acquire Leap — an outcome that is far from certain — the FCC will be even more likely to take the latter option.

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Colin Gibbs

Colin Gibbs

Mobile Curator Gigaom Network

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