AT&T Gets FCC Approval for Leap Acquisition, Will Continue Cricket Prepaid Service
More big wireless companies are stepping up their prepaid offerings, and AT&T is one of them. Its acquisition of the country's largest independent prepaid wireless carrier, Leap Wireless, was approved on Thursday, giving AT&T a new tool in its fight against T-Mobile.
AT&T announced this week that it had the Federal Communications Commission's approval for its takeover of Leap Wireless International Inc., which operates the prepaid cellular service Cricket Communications. In the deal, which cost AT&T $15 per share, which totals about $1.2 billion, AT&T will get Leap Wireless's properties, network, and retail stores, as well as over four and a half million customers.
In its announcement, AT&T said it would keep the Cricket brand alive, which operates in small and mid-sized markets across the U.S., along with a few big cities. Cricket, under AT&T, will be relaunched over the mobile giant's GSM, HSPA+ and LTE networks, along with the current CDMA network, at least for now:
"In the coming weeks, Cricket will be integrated with AT&T's existing operations to create the new Cricket," stated AT&T's announcement. "The new Cricket will 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. The new Cricket will have access to AT&T's nationwide 4G LTE network covering nearly 280 million people. AT&T will gain access to Cricket's distribution channels and will be able to expand Cricket's presence to additional U.S. cities. "
The biggest win for AT&T, besides having a new prepaid brand with about a 4.6 million built-in customer base, is the acquisition of Leap Wireless's spectrum. According to GigaOm, AT&T is picking up precious bands of airwaves in key areas that it couldn't win in its attempt to purchase T-Mobile. On the west side of the U.S., Leap has several bands of spectrum, including the prize 700Mhz band in places like San Antonio, Houston, Denver, Kansas City, San Diego, Phoenix, and Portland, OR, as well as Chicago, all where AT&T wants to build out its mobile broadband networks and increase network capacities and speeds.
The FCC was concerned about AT&T's plans to take over the largest independent prepaid wireless company, but AT&T pledged to divest itself of some spectrum in various markets as it begins deploying LTE on Leap Wireless's bands. The company's pledge of maintaining Cricket's $40 unlimited text and talk plan for the next year and a half -- and honoring Cricket customers' plans for the rest of its CDMA network's life -- mitigated some of those concerns as well.
As part of the deal, AT&T also agreed to fold its other, T-Mobile targeted, prepaid wireless company Aio Wireless into Cricket.
The announcement for AT&T comes around the same time that Sprint has announced its own self-branded prepaid service, which joins Sprint's two other prepaid brands, Virgin and Boost, in that market. The success last year of T-Mobile, changes in the smartphone industry, and moves by the FCC's new chairman Tom Wheeler has made unlocked devices and prepaid phone services the hottest new trend in 2014, as we previously predicted would happen. Be prepared for a race to the bottom this year as wireless companies and smartphone manufacturers try to pick up the last possible smartphone market that hasn't been fully saturated yet.