In the telco world, most analysts are probably more interested in whatever is going on in the merger (or lack thereof) between T-Mobile USA and Sprint these days.
But here's at least one -- albeit a much smaller one -- that has been given the green light.
The Federal Communications Commission approved AT&T's proposed takeover of Leap Wireless on Thursday.
In its decision, the FCC acknowledged that the merger "has the potential to cause some competitive and other public interest harms in several local markets, as well as to value-conscious consumers."
Nevertheless, the benefits appear to outweigh the costs -- at least as far as the FCC is concerned -- given that the Commission continued on that those detractions would "likely be counterbalanced to some degree by certain claimed public interest benefits."
Basically, the FCC explained that AT&T made a long list of promises, most of which involve building wireless networking infrastructures in rural areas that are still disconnected. Here's a snippet:
AT&T has also made commitments to build out LTE service in six specific markets in south Texas within 18 months, which will ensure that consumers in those markets have access to advanced 4G services. In addition, AT&T has committed to offer certain rate plans targeted to help value-conscious and Lifeline customers. AT&T also has agreed to offer a device trade-in credit program and a feature phone device trade-in program to certain Leap customers prior to discontinuing CDMA service in a particular area in order to ensure that Leap customers have future access to wireless service. The commitments providing for spectrum divestitures, the deployment of unused spectrum, the build out of LTE service, rate plans, and customer migration will all apply to south Texas markets. They will ameliorate the potential harms and ensure public interest benefits in those markets by, among other things, ensuring that AT&T has every incentive to provide higher quality service, and minimizing customer dislocations that might result from the proposed transaction.
The nation's second largest mobile provider first revealed its intentions to acquire prepaid wireless company Leap Wireless last July.
In a deal worth roughly $1.3 billion according to the latest FCC filing, here is a rundown of what AT&T originally put on the table last summer:
- 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.
- AT&T has also agreed to take on Leap's outstanding debts as of June 30, 2013.
- 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.
Leap’s network covers close to 96 million people across 35 U.S. states, with its 4G LTE network alone supporting 21 million residents within these states. The Leap purchase also incorporates spectrum in the PCS and AWS bands covering 137 million people, which AT&T touted as complementary to its own spectrum licenses.
Meanwhile, as of December 31, AT&T had approximately 110 million wireless subscribers. Its wireless network covers roughly 308 million people nationwide, with 4G LTE alone ready to cover nearly 280 million people.
Now that the deal has been approved, AT&T can use Leap's unused spectrum to further along its 4G LTE deployment roadmap. It also means AT&T can be more competitive in the low-cost prepaid market through Leap's Cricket brand, which is supposed to remain in tact under its existing moniker while expanding across more U.S. markets.