July 16, 2013

AT&T acquires Leap Wireless

Communications and mobile provider company AT&T announced at the end of last week that it will acquire Leap Wireless, which specializes in prepaid and wireless services. The deal is reportedly for $15 per share, which will bring the total cost close to $1.2 billion, as Leap has 79 million shares outstanding, according to TechCrunch.

The technology acquisition will also bring Cricket – Leap's main brand – under AT&T control. A Leap press release explained that the Cricket brand name will remain in place and Cricket customers will have access to AT&T's 4G LTE mobile network.  

"The result will be increased competition, better device choices, improved customer care and a significantly enhanced mobile Internet experience for consumers seeking low-cost prepaid wireless plans," Leap said in a statement. "The combined company will have the financial resources, scale and spectrum to better compete with other major national providers for customers interested in low-cost prepaid service."

TechCrunch further speculated that the driving force behind this opportunity is spectrum, as AT&T has been trying to acquire more of it over the last few years to improve what it can offer customers. The article cited an old interview FierceWireless had with Leap CEO Doug Hutcheson, in which he explained that 60 percent of his company's spectrum was going unused. Thus, the technology acquisition will benefit both parties.

That unutilized spectrum includes 41 million Leap customers and can provide additional capacity and enhanced network performance for customers' growing mobile Internet usage, Leap explained in its press release.

M&A activity is often able to benefit consumers, and is not just for companies to grow larger. When businesses have stronger products and services, it is their customers who can also reap the rewards.