FEBRUARY 2, 2010 Leap Wireless Seeks a Buyer
By JEFFREY MCCRACKEN And NIRAJ SHETH Wall Street Journal http://online.wsj.com/article/SB10001424052748704107204575039540686432982.html?mod=WSJ_Tech_LEFTTopNews Cellular provider Leap Wireless International Inc. has hired advisers and formed a special board committee to look into selling the company or merging with rivals, several people familiar with the matter said. Leap, which sells its service under the Cricket brand and has about 4.7 million customers, has hired Goldman Sachs Group to advise the company as it "reassesses its alternatives and checks its options out there right now," according to one person familiar with the process. While some bankers consider rival MetroPCS Communications Inc. as the most likely partner for Leap, the company's advisers have in recent weeks been feeling out larger wireless carriers such as AT&T Inc. and Verizon Wireless to see if they would be interested in acquiring Leap, these people said. So far, those talks haven't lead to any deal. But the conversations indicate Leap, which provides prepaid service aimed at the lower end of the market, is feeling squeezed as major carriers like AT&T, Verizon and Sprint Nextel Corp. encroach on its prepaid turf and slash their contract rates. One indicator of the change in prepaid operators' fortunes: Leap in late 2007 spurned an unsolicited all-stock offer from MetroPCS initially valued at $5.5 billion, about five times Leap's current market value. Leap's board has also formed a three-person committee to assess strategic options. That committeemade up by newly appointed board members John H. Chapple, Ronald J. Kramer and William A. Roperis being advised by Morgan Stanley, these people said. Mr. Chapple is a former CEO of Nextel Partners, which Sprint acquired in 2006. It wasn't clear if Leap and MetroPCS are currently in talks, but that combination is "the one that makes the most sense for Leap, and both sides know it," said one of the people familiar with the matter. The person added it appeared Leap was trying to round up a bidder to prod MetroPCS to pay a higher price for any potential bid. Leap shares closed Monday at $14.92, well below the $41 its shares hit in May. MetroPCS and Leap have similarities in their strategies, customer bases and mobile technologies. A Leap spokesman didn't reply to requests for comment. A MetroPCS spokesman declined to comment. Other bidders could face hurdles with regulators, technology or their own strategies. AT&T and Verizon Wireless are focused on moving their high-end customers into more expensive data plans. T-Mobile USA, a unit of Deutsche Telekom AG, operates a different technology. Sprint, which bought Virgin Mobile USA last year, is also going after prepaid customers, but could choose to continue luring them away rather than acquiring them. Spokespeople for the carriers declined to comment or didn't reply. Prepaid cellular outfits grew quickly by offering lower prices without the hassle of restrictive contracts and credit checks. Analysts estimate about one in five U.S. mobile subscriptions are prepaid. Leap spun out from Qualcomm Inc. in 1998 and expanded primarily into rural markets. It has customers in 34 states and annual sales around $2.3 billion, making it the seventh-largest wireless carrier in the U.S. ================================================= George Antunes Voice (713) 743-3923 Associate Professor Fax (713) 743-3927 Political Science Internet: antunes at uh dot edu University of Houston Houston, TX 77204-3011 *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
