AT&T completes acquisition of prepaid carrier Leap Wireless

AT&T, the second-largest wireless carrier in the US, has completed its acquisition of prepaid carrier Leap Wireless, operating the Cricket brand.

In a move towards consolidation in the US telecommunications industry a few days after Japan's Softbank acquired Sprint Nextel, in July 2013 AT&T said it was buying its smaller rival Leap Wireless International Inc for $1.2 billion in cash (See: AT&T to acquire Leap Wireless for $1.2 bn). 

For its payout of $15 a share, or approximately $1.2 billion, AT&T would receive the operators wireless properties, network assets, retail stores and 4.57 million subscribers.

The deal is expected to give AT&T a better grip of the prepaid market and help it better compete against T-Mobile. The company was also attracted to Cricket's spectrum holdings, and had acquired spectrum covering the PCS and AWS bands.

According to AT&T, the spectrum covered 138 million people, and included unutilised spectrum covering 41 million people.

Even as T-Mobile acquired prepaid carrier MetroPCS and started the process of transitioning MetroPCS' users to its updated and more efficient 4G network, AT&T would start transitioning Cricket subscribers to its 4G network and putting the unutilised spectrum to work for its 4G LTE services.

In a 14 March statement, AT&T said it planned to launch a "new Cricket," to "shake up the no-contract segment with a combination of simple, low-cost rate plans; a terrific lineup of smartphones; and a great network experience."

AT&T planned to complete its migration of Cricket customers within 18 months of launching the new Cricket.

Prior to the deal's approval, the Federal Communications Commission (FCC) made AT&T agree to sell off some Leap spectrum in 12 markets, mostly in Texas and Nevada.

Even as AT&T acquired full right over Leap, it offered contingent rights to Leap shareholders that allowed them to gain from the sale of 700 MHz ''A Block'' spectrum of the latter, which  was purchased by Leap in 2012.

AT&T said in a statement it would integrate Cricket with its existing operations to form a no-contract segment offering low-cost rate plans, smartphones as also a strong network experience from AT&T. 

The new Cricket would leverage from AT&T's nationwide 4G LTE network covering around 280 million people, while AT&T would benefit from Cricket's distribution channels and additional markets.

The customer migration to Cricket is expected to happen after around 18 months following the launch of the new brand.

This comes as the carrier's second attempt in the last two years to acquire a wireless carrier.

In 2011, the company had considered acquisition of T-Mobile USA for $39 billion, but the deal failed to materialise due to the disapproval of US regulators.