AT&T announced on Friday that it will pay Leap Wireless International about $1.2 billion to get hold of the company.
The acquisition package will include all of Leap’s stock and wireless properties including licenses, assets, retail stores, and 5 million customer accounts.
Prior to this announcement, Leap’s value has increased by 2.5 percent closing at a value of $7.98 per unit share. It then increased and closed at $17.31 per share in after-hours trading. AT&T is buying it at $15 per share.
If AT&T will be able to close the deal with Leap Wireless which sells the brand Cricket, it will give them ease of access and presence in the progressively more profitable prepaid market. AT&T plans to keep the brand name Cricket but will integrate its fastest 4G LTE network and offer it to Cricket’s customers. It will also allow Cricket to expand in other U.S states. So far, the brand is only available in 35 states.
"The combined company will have the financial resources, scale and spectrum to better compete with other major national providers for customers interested in low-cost prepaid service," AT&T said in a press release.
Leap Wireless has about 4.6 million customers as of the end of the first quarter of this year. This is lower than previous years’ 5.17 million customers. Its earnings during the first quarter are also 4.3 percent lower closing at a valuation of $789.9 million revenue. Leap declared a $2.8 billion net debt in April.
AT&T’s offer is now under review with the Federal Communications Commission and the Department of Justice and expected to be finalized by March 2014. The company is hopeful that they will be able to close the deal after its failure to get T-Mobile for $39 billion.
