AT&T Inc. (T) Makes the Leap for More Spectrum

Ever since a consortium of companies paid a gazillion dollars for bankrupt Nortel Networks’ assets — only to be trumped a short time later by Google Inc (NASDAQ:GOOG), which paid a bazillion more for Motorola — the value of wireless spectrum has been firmly cemented in investors’ minds.

Any company with a smattering of spectrum saw its stock soar as the possibility of a super premium bid fomented images of riches being played out. More often than not, however, those dreams were dashed when offers were not forthcoming, though in the deals that did get made in the aftermath — such as Softbank’s acquisition of Sprint Nextel Corporation (NYSE:S) (and Sprint’s subsequent purchase of Clearwire Corporation (NASDAQ:CLWR)) and T MOBILE US INC (NYSE:TMUS)‘s acquisition of MetroPCS — it was the lure of spectrum that drove the deals.

So that’s the lens through which investors should view AT&T Inc. (NYSE:T)‘s $1.2 billion bid to acquire the prepaid Cricket service offered by Leap Wireless International, Inc. (NASDAQ:LEAP). Sure, it brings in another 5.2 million subscribers, a 3G CDMA network covering 96 million people, a 4G LTE network covering 21 million people, and the Cricket brand, which, while fumbling, seems a better business than Ma Bell’s own Go service. But more importantly, it also includes Leap Wireless International, Inc. (NASDAQ:LEAP)’s AWS and PCS bands, covering 137 million people that AT&T Inc. (NYSE:T) says is complementary to its current spectrum licenses.

Analysts say that compared with Verizon Communications Inc. (NYSE:VZ) and Sprint Nextel Corporation (NYSE:S), AT&T Inc. (NYSE:T) controls less spectrum and on a per-subscriber basis has even less spectrum than T-Mobile. Indeed, along with the news announcing the acquisition, AT&T Inc. (NYSE:T) said upon closing it will put Leap’s underutilized spectrum covering 41 million people to work building out its own 4G LTE deployment while providing additional capacity. The chance to enhance network performance for AT&T’s customers’ growing mobile Internet usage was something it couldn’t pass up, and getting Leap’s customers off its networks and onto AT&T Inc. (NYSE:T)’s own to free up even more spectrum may be a high priority, too.

It also serves the dual purpose of keeping that spectrum out of T-Mobile’s hands. Leap and MetroPCS had tried to hook up one time before, so it wouldn’t have been so far-fetched to see T-Mobile finally bringing them together and gaining access to that spectrum as well.