AT&T’s Leap Buy Reflects Slowing Growth of Postpaid

**Editor’s Note: Please click


for a recap of the biggest mergers in Q2 2013.**

AT&T‘s purchase of Leap Wireless which operates the Cricket Communications brand is a sign of the times.

Already this year, SoftBank of Japan has purchased nearly three-quarters of Sprint; Sprint, in turn, bought Clearwire, the broadband provider; and T-Mobile USA closed its purchase of MetroPCS, America’s then-fifth-largest wireless operator. AT&T’s buy gives the carrier a bigger foothold in the prepaid market, whose growth is starting to slow just not as quickly as postpaid’s. Statistics from late 2012 show the four major U.S. carriers were only adding new customers at half the rate of the year prior.

We believe the move highlights the reality of slower postpaid growth and an increasing focus on the value-focused consumer,” noted Canaccord Genuity analyst Greg Miller, commenting on the acquisition.

If approved, AT&T will pay Leap nearly $1.2 billion, or $15 per share. Leap’s Cricket operates 3G and 4G networks in 35 states.

While the potential of picking up 6 million new customers is a boon to AT&T, the spectrum acquisition is even more significant. AT&T plans to put Leaps unutilized spectrum which covers 41 million people to use in furthering its 4G LTE deployment and providing additional capacity and enhanced network performance for customers growing mobile Internet usage.

We believe the most recent surge in wireless merger and acquisition activity is likely the result of a continued surge of wireless usage by consumers that increasingly values wireless spectrum at a premium,” added Miller. “Finally, we believe the transaction will lead to better utilization of under-used spectrum, benefiting wireless towers going forward.”

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