Added by Gary Dunn on July 12, 2013
AT&T announced on Friday its plans to acquire the parent company of Cricket Wireless, Leap Wireless International (NASDAQ:LEAP) for approximately US$1.2bn.
In the proposed deal, AT&T will acquire Leap Wireless’ spectrum, allocation of radio frequencies used by cellular phones, of which approximately 60% is unused. The unused spectrum could provide wireless phone service to an additional 41m customers – the additional spectrum will also allow AT&T to extend and expand its 4G LTE network.
The deal, if approved, will increase AT&T’s subscriber base by approximately 5.3 million subscribers, for a total of approximately 112 million subscribers – just behind the largest US wireless carrier Verizon with approximately 116 million subscribers.
AT&T said it would retain the Cricket brand along with stores and other wireless properties and, possibly, Cricket’s 3,400 employees.
Industry insiders say the acquisition is primarily about Leap Wireless spectrum – its capacity to handle cellular phones – reportedly worth approximately $3bn. While AT&T could sell the rights, or license, to the spectrum, say industry experts, the value is in using the spectrum to acquire new customers and to extend its network to more areas, thereby providing more US coverage.
The deal is subject to approval by the US Federal Trade Commission (FTC) and Department of Justice (DOJ). The FTC and DOJ require information about large mergers before they occur under a federal program called the Hart-Scott-Rodino Act which assesses whether the transaction could adversely affect US commerce under anti-trust regulations.