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Summary:

The rumormongers are at it again, sticking together mobile operators willy nilly as if this the wireless industry was some giant multi-billion-dollar Mr. Potato Head. The latest report comes from Reuters, which has AT&T in talks Leap Wireless, the owner of prepaid carrier Cricket Communications.

Mr. Potato Head Parade

The rumormongers are at it again, sticking together mobile operators willy nilly as if this the wireless industry was some giant multi-billion-dollar Mr. Potato Head. The latest report comes from Reuters, which has AT&T in talks Leap Wireless, the owner of prepaid carrier Cricket Communications.

We called BS on the supposed T-Mobile-MetroPCS tie-up earlier this week, and we’re calling BS on this one, too — for the exact same reasons. Leap is a CDMA operator, while AT&T networks are built on the GSM family of networks. As with MetroPCS and T-Mobile, the only thing AT&T and Leap have in common are plans to launch LTE on the same Advanced Wireless Services (AWS) spectrum, but that’s hardly enough to justify the enormous cost and hassle of such a deal.

Let’s put this in perspective: Leap is a regional operator with 6 million customers with networks and an average of 23 MHz of spectrum in mostly mid-sized markets across the U.S. as well as in a few big cities like Los Angeles, Chicago and Houston. According to Reuters, it has a market cap of $400 million and a debt load of $3.2 billion. So for a transaction of about $4 billion, AT&T gets an incompatible CDMA network, extra LTE capacity in mostly smaller markets and an incomplete footprint of licenses, most of which are already encumbered with that aforementioned CDMA network.

Meanwhile Verizon is paying around $3.9 billion to buy SpectrumCo and Cox Communications to get 20 MHz of pristine no-strings-attached AWS spectrum that covers nearly every populated region across the country. That cable spectrum may be off the market, leaving AT&T with fewer options, but is Ma Bell really this desperate? If it is, it certainly has the cash: $39 billion left over from its failed T-Mobile bill. But I really, really doubt it.

Photo courtesy of Shutterstock user Iourii Tcheka

  1. Thank you for providing clarity to these BS rumors. I can’t imagine either T-Mobile or at&t taking on these acquisitions with such little payout.

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