MetroPCS misses analysts’ estimates for new subscribers (USA)
U.S. wireless operators Metro PCS and Leap Wireless have missed analysts’ estimates in terms of the number of subscribers added in the fourth quarter. According to a report by BN, MetroPCS added 197,000 new users during the period against an estimated 223,000 new users. Further, Leap Wireless has reported a monthly churn of 3.9 percent against the estimated 3.6 percent.
According to reports, a major reason for this decline is the affordable tariff plans introduced by some of the bigger players such as AT&T and Verizon. Sources claim that the combined offer of smartphones and iPhones with a contract by the leading telecom operators have also resulted in many subscribers switching to their services.
Cricket inks a 4G roaming agreement with LightSquared (USA)
LightSquared has signed a national roaming agreement with Leap Wireless. This arrangement will allow Cricket, Leap’s operating subsidiary, to supplement the LTE coverage that Cricket plans to deploy across its own networks over the next few years with LTE roaming services from LightSquared.
According to Doug Hutcheson, Leap’s President and CEO, the company intends to deploy their LTE networks beginning this year to complement the existing nationwide 3G services they currently offer to customers. This new roaming arrangement will allow them to offer customers an even-greater 4G service area as LightSquared expands its own network.
The Financial and other terms of the roaming agreement were not disclosed by the company.
American telcos line up more prepaid offerings
www.WirelessFederation.com/news: New brands and plans have been rolled out by Sprint Nextel, not to forget its partnership with Wal-Mart Stores Inc. that will charge seven cents per minute or text message. Sprint is not the only operator moving aggressively into the low end of the cell phone market. Almost all the big U.S. wireless carriers are risking profits for growth by selling services to consumers without requiring them to sign contracts.
Even Verizon wireless avoiding the prepaid market for long, has opened its nationwide network to prepaid resellers and has accounted for nearly half of the industry’s prepaid subscriber additions. As the big players have started moving into the prepaid environment, smaller players like MetroPCS Communications Inc. and Leap Wireless International Inc., which combined have 12.4 million customers, have been pressurized to slash prices and explore a merger.
The prepaid option gained popularity during the recession as lost jobs and cut wages meant people couldn’t commit to signing multiyear contracts. Cheaper rates, no contracts and no termination fees comes as a bait while access to the most advanced phones and the subsidies that make them affordable have to be relinquished by the subscribers.
Out of every five Americans, one is with a cell phone that had a prepaid plan at the end of 2009, compared with 15% in 2007. In some markets, up to 30% of subscribers are on prepaid plans. Prepaid customers bringing in less money every month is one of the major risks in providing prepaid services. There is also no guarantee whether they’ll stick around before jumping to another company. But at the same time prepaid customers pay higher upfront prices for phones, since there are no carrier subsidies.
Leap wireless net loss widens, revenue increases (USA)
www.WirelessFederation.com/news: The first-quarter revenues of the USA based Leap Wireless has gone up by 14% to US$584.8 million but the net loss widened to US$65.4 million from US$47.4 million a year ago. Operating loss for the first quarter of 2010 was $1 million, compared to an operating income for the first quarter of 2010 was $5.1 million.
Increased depreciation and amortization expense in connection with the completion of the launch of new markets has been cited as the reason behind the year-over-year increase in net loss. Higher interest expense due to increased debt levels and the elimination of capitalized interest is also one of the reasons behind the loss.
Approximately 446,000 net customer additions has been made by the telco in the first quarter along withn249, 000 net voice additions and 197,000 net broadband additions. According to Doug Hutcheson, Leap’s president and CEO, the first quarter customer growth helped deliver a 27 percent annual increase in adjusted OIBDA, even as it absorbed higher acquisition costs related to the company’s strong customer additions during the quarter and approximately $4 million of expense relating to store and staffing adjustments.
Leap engages in job cuts and closes stores (USA)
www.WirelessFederation.com/news: 180 jobs have been cut and 27 company stores nationwide have been shuttered by Leap Wireless which has described its restructuring as its changing priorities for the year. 90 of the jobs cut were field positions while 90 were corporate positions.
After the move, the number of employees in the company is 4200 and the number of company-owned stores is 42. The review of the stores was taken up by the company in February and the decision to close the stores was taken in early March. The closing is described as a part of normal repositioning that goes on in any retail business.
Recently, a joint venture has been announced by the company with regional, flat-rate wireless provider Pocket Communications to boost Leap’s position in south Texas, where Pocket has a significant presence.
Major Banks have been hired and special committee of its board has been formed to consider various strategic options, including selling the company or merging with another carrier. During its fourth-quarter earnings announcement, the plan of the company to launch a BlackBerry device from Research In Motion as well as a smartphone running Google’s Android platform was also disclosed.
Leap Wireless & Pocket Communications start joint venture (USA)
www.WirelessFederation.com/news: Deal for a joint venture has been signed between Leap Wireless International Inc. and a Texas-based month-to-month mobile service provider, Pocket Communications Inc.
Under the deal, Leap will own 76% of the joint venture, which includes wireless spectrum and operating assets, while Pocket controls the rest besides buying some of Pocket’s assets for $38 million in cash.
Leap has expressed its wish to hold the controlling stake in the joint venture with an aim to strengthen its position in the South Texas area. The deal signifies an increased willingness for deals among low-end players that provide wireless service without a contract.
MetroPCS hires bankers to advice on Leap acquisition (USA)
www.WirelessFederation.com/news: Investment bankers have been hired by US-based pre-paid specialist MetroPCS to advise it on the potential acquisition of Leap Wireless. Earlier it was publicly admitted by Leap Wireless that it has appointed Goldman Sachs and Morgan Stanley to advise it on a sale as it looks for potential suitors.
In the past also, moves were prepared by MetroPCS for Leap making a USD5.5 billion all-stock takeover offer in September 2007, offering 2.75 of its own shares for every Leap share.
However, the offer was rejected by the board members of Leap Wireless saying it undervalued the company. JP Morgan Chase and Co has been approached by MetroPCS this time in an effort to facilitate a mutually agreeable deal this time around.
US telco Leap Wireless hires advisors for potential sale
www.WirelessFederation.com/news: Goldman Sachs and Morgan Stanley have been hired by US cellco Leap Wireless to advise the operator on a sale as it looks for potential suitors. A number of potential buyers like MetroPCS, Verizon, and AT&T have been approached by Leap in the recent days.
MetroPCS made a USD5.5 billion all-stock takeover offer for Leap in early September 2007, offering 2.75 of its own shares for every Leap share. However, Leap rejected the offer in mid-September, citing that it undervalued the company.
