In the wake of Softbank's sprint into the US, AT&T has moved to consolidate a bit more of what's left of the market. They're acquiring Leap Wireless for $15 per share, which comes to $1.2B in cash plus the assumption of $2.8B in net debt.
For the folks at Leap, a deal such as this was hardly unexpected. They've been in restructuring and retooling mode for some time while awaiting a bid good enough to accept, not that employees aren't dreading the coming integration phase.
The purchase will give AT&T another 5.2 million subscribers, a 3G CDMA network covering 96M people and a 4G LTE network that reaches 21M of those, the Cricket prepaid brand, and of course a new cache of spectrum to add to their vault.
That last one is surely the key piece to the puzzle of what AT&T is up to. While AT&T very well may use the opportunity to do something more substantial in the prepaid world, spectrum is the treasure of today's wireless world. Once they close, AT&T will put Leap's unused wireless to work powering its ongoing LTE network expansion.
After their experience with the failed T-Mobile deal, AT&T waited just a few days until Softbank was crowned as the new, more competitive #3 in the industry. The FCC is unlikely to shoot down this one now, after all.
AT&T's planned purchase of Cricket has already had consequences downstream. Crown Castle says that 1,300 of their towers have both companies as tenants, which puts perhaps 2% of their site rental revenues in flux depending on what AT&T integrates when. Leap's other suppliers, whether tower, equipment, and backhaul, will also be evaluating the effects of the deal.
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