Leap Wireless International, Inc. (LEAP) Could Have Further Upside

Combined, an AT&T Inc. (NYSE:T)/Leap Wireless International, Inc. (NASDAQ:LEAP) entity will still be smaller than Verizon Communications Inc. (NYSE:VZ), which has more than 110 million subscribers. Still, it should allow AT&T to strengthen its network, which still lags behind Verizon Communications Inc. (NYSE:VZ)’s in terms of LTE coverage.

The question is how valuable is Leap’s spectrum? The company’s CEO has claimed its spectrum assets alone are worth $3 billion — even though Leap Wireless International, Inc. (NASDAQ:LEAP)’s market cap has traded below $1 billion since 2011.

AT&T Inc. (NYSE:T)’s offer only values the company at $1.2 billion.

A bidding war for Leap Wireless?

But, like the Sprint deal, could DISH start another bidding war? Analysts at Macquarie predicted that Leap would be acquired last week, however, they weren’t expecting AT&T to be the buyer.

Rather, Macquarie was expecting a bid from DISH Network Corp. (NASDAQ:DISH) or T MOBILE US INC (NYSE:TMUS). With DISH Network’s Sprint Nextel Corporation (NYSE:S)/Clearwire Corporation (NASDAQ:CLWR) ambitions falling through, a bid for Leap Wireless International, Inc. (NASDAQ:LEAP) might make sense; likewise, T-Mobile would benefit from owning Leap — and with its rallying stock, could do it with a stock-for-stock deal.

Or, perhaps DISH would make a play for T MOBILE US INC (NYSE:TMUS)? It was rumored after the Sprint deal fell through, and T-Mobile head John Legere told CNet he was “intrigued” by DISH’s vision and was open to a combination.

More money to be made in the wireless business

AT&T Inc. (NYSE:T)’s bid for Leap Wireless International, Inc. (NASDAQ:LEAP) may be attractive based on its market valuation, but if recent deals are any indication, the wireless giant may be forced to sweeten the offer.

T MOBILE US INC (NYSE:TMUS), too, has been a great performer in just the last two months, but the nation’s fourth-biggest carrier might have further upside. A potential deal with DISH Network Corp. (NASDAQ:DISH) looms as a possibility.

At any rate, the consolidation in the wireless industry appears to be far from over.

The article Leap Wireless Could Have Further Upside originally appeared on Fool.com.

Salvatore “Sam” is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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