AT&T will buy prepaid mobile service provider Leap Wireless — that offers services under Cricket brand name — for $1.19 billion.
The price is almost double the current value of the prepaid mobile service provider which has approximately 5 million subscribers. Leap’s network covers approximately 96 million people in 35 U.S. states.
AT&T will benefit from Leap’s 700 Mhz A Block spectrum in Chicago, which Leap purchased for $204 million in August 2012. The telecom giant will also expand its 4G services using Leap’s spectrum.
As of April 15, 2013, Leap had $2.8 billion of net debt.
Leap operates a 3G CDMA network, as well as a 4G LTE network covering 21 million people in these areas, and has 3,400 employees.
AT&T is planning to expand Cricket’s presence to additional U.S. cities, utilizing Cricket’s distribution channels.
The acquisition includes spectrum in the PCS and AWS bands covering 137 million people and is largely complementary to AT&T’s existing spectrum licenses.
AT&T plans to use Leap’s unutilized spectrum – which covers 41 million people – to expand its 4G LTE services.
The announcement comes days after Softbank’s acquisition of Sprint.
Two years ago, AT&T struck a deal to buy T-Mobile for $39 billion, but U.S. regulators blocked their attempt to merge.
The # 4 U.S. mobile operator T-Mobile USA merged in April with smaller rival MetroPCS.