Last summer, AT&T announced that it had reached an acquisition deal with Leap Wireless. The company said that it would be buying out the provider, which owns and operates the popular prepaid carrier Cricket, for $15 per share—equal to $1.3 billion. All it needed was approval from the FCC.
And it just got it. Yesterday the Federal Communications Commission gave AT&T’s acquisition proposal a thumbs up, ruling that “the public interest benefits of the proposed transaction outweigh the likelihood of significant public interest harms.” So what does this mean for everybody involved?
It’s pretty simple. As for AT&T, it picks up 5 million or so new customers, some much-needed clout in the prepaid world, and all of Leap’s network assets. Leap Wireless gets $15 per share, and whatever else came with the package. And Leap customers get access to more devices and a larger network.
There was some negotiations involved. Here’s a list of some of the commitments AT&T made to the FCC to seal the deal (via The Verge):
- Spectrum divestitures in certain markets, which will help ensure that AT&T’s competitors have access to spectrum.
- Deploy LTE service using unused Leap spectrum within 90 days or 12 months of closing, which will ensure that that spectrum is being deployed and that consumers in the current Leap service areas will benefit from network improvements to AT&T’s advanced 4G network technologies.
- Build out LTE service in six specific markets in south Texas within 18 months, which will ensure that consumers in those markets have access to advanced 4G services.
- Offer certain rate plans targeted to help value-conscious and Lifeline customers.
- Offer a device trade-in credit program and a feature phone device trade-in program to certain Leap customers prior to discontinuing CDMA service in a particular area in order to ensure that Leap customers have future access to wireless service.
- Honor existing CDMA roaming agreements that AT&T is assuming from Leap so long as it operates the CDMA network.
The way I understand it, AT&T will slowly be migrating Cricket users off of CDMA onto their GSM network. This will obviously take a few years, but this offers many benefits to Leap customers such as a larger (and faster) LTE network, a larger retail footprint, and a much wider selection of devices.
Cricket currently offers both the iPhone 5s and 5c, but in CDMA form, and this deal will give customers the ability to purchase GSM versions which are much more compatible with domestic and international carriers. Again, I see this as a win for everyone as long as everything goes according to plan.
What do you think?