With every passing day, as the competition gets stronger, more and more companies are looking to integrate with other similar companies offering complementary product mixes. One reason could be that time is money, and by the time these companies organically develop themselves to offer what others are providing, it may be too late. Hence, acquisitions have started to take place more than ever. Recently, AT&T Inc. (NYSE:T) acquired Leap Wireless International, Inc. (NASDAQ:LEAP) to better equip itself in the face of rising competition and to expand its subscriber base.
Following Sprint Nextel Corporation (NYSE:S)’s acquisition of Clearwire in the U.S. wireless industry, AT&T Inc. (NYSE:T) has been reported to have filed for acquisition of Leap Wireless International, Inc. (NASDAQ:LEAP). With the approval, AT&T will be able to control Leap’s stock and wireless properties, including licenses, network assets, chain of retail stores and roughly 5 million subscribers. Leap’s network includes roughly 96 million people across 35 states of the U.S.
Potential synergies to AT&T
Leap Wireless International, Inc. (NASDAQ:LEAP) is best known for its Cricket brand. It is expected that AT&T Inc. (NYSE:T) will keep this brand name and expand Cricket’s service offerings to other markets within the U.S. Leap’s network caters to 21 million people under the Cricket brand, offering 3G CDMA and 4G LTE network services.
AT&T plans to provide Cricket customers with supplementary access to AT&T’s 4G LTE mobile network. As a result, there will be greater competition, improved device choices, enhanced customer care and a substantially superior mobile internet experience for customers looking for prepaid wireless plans at a reduced cost. The two companies together will have the funds, scale and spectrum to fight against the big national providers. Cricket’s workforce, operations and distribution networks will assist in AT&T Inc. (NYSE:T)’s expansion and make its prepaid segment highly competitive.
This purchase covers spectrum in the PCS and AWS bands. It is a large complement to AT&T Inc. (NYSE:T)’s current spectrum licenses. AT&T intends to use Leap’s unutilized spectrum to further widen its 4G LTE deployment and provide extra capacity. This should increase the network quality for everyone.
The market position of its competitor, Sprint
On the other hand, Sprint Nextel Corporation (NYSE:S) recently launched The Sprint Unlimited Guarantee, which offers its customers unlimited talk, text and data for a whole lifetime. Customers will no longer need to worry about their wireless bill or controlling its usage. Also, customers can customize their package according to their usage and ease. This plan is being offered at quite a lower charge. Hence, Sprint Nextel Corporation (NYSE:S)’s customers will able to enjoy substantial annual savings as compared to AT&T Inc. (NYSE:T), Verizon etc.