AT&T is closing out the week with a major acquisition. The nation's second largest mobile provider has announced its plans to buy prepaid wireless company Leap Wireless.
Here's how the financials shake out:
- AT&T is picking up Leap for $15 per share in cash.
- AT&T will get all of Leap’s stock and wireless properties. That consists of licenses, network assets, retail stores and approximately five million subscribers.
- Leap shareholders are also entitled to net proceeds received on the sale of Leap’s spectrum in Chicago, which Leap purchased for $204 million in August 2012.
This merger means a number of things for AT&T.
Leap’s network already covers approximately 96 million people across 35 U.S. states. Its 4G LTE network alone covers 21 million people in these states.
The Leap purchase also includes spectrum in the PCS and AWS bands covering 137 million people, which AT&T touted is complementary to its own spectrum licenses.
Thus, if/when the deal is approved, AT&T is going to use Leap's unused spectrum to advance its own 4G LTE deployment. That's significant because Leap's unused spectrum is estimated to cover approximately 41 million people.
Buying Leap Wireless also means AT&T will be getting more competitive in the low-cost prepaid market through Leap's Cricket brand. The Cricket moniker will remain in tact and expanded to more U.S. markets.
Anyone familiar with significant mergers among upper-tier, nationwide mobile providers in the last few years probably already knows that the deal is still subject to review by the Federal Communications Commission as well as the Department of Justice.
AT&T is predicting that the transaction will close within the next six to nine months.