Feeds

MetroPCS asks to swallow Leap Wireless

'You don't do contracts. I don't do contracts. Let's get it on.'

Using blade systems to cut costs and sharpen efficiencies

MetroPCS wants to buy Leap Wireless, intent on creating one big we-don't-do-contacts wireless carrier. And it wants the world to know it wants to buy Leap Wireless. But there's no telling what Leap wants.

This morning, the Texas-based MetroPCS sent a letter to Leap's board of directors, offering to purchase its San Diego-based competitor for more than $5bn in stock. Then it slapped the letter into a press release, flirting with stockholders everywhere.

"We believe a combination of Leap Wireless and MetroPCS is compelling and would yield substantial immediate benefits to the shareholders of both companies," the letter reads. "Institutional shareholders of both of our companies as well as the Wall Street research community repeatedly have articulated their desire to see a business combination between our two companies announced before the end of 2007."

With MetroPCS offering to exchange 2.75 of its shares for each share of Leap stock - and the average MetroPCS share price hovering around $28 - the deal would be worth close to $5.5bn. Plus, MetroPCS would assume or refinance approximately $2bn in Leap debt.

According MetroPCS, the merger would create a new national wireless carrier covering each of the country's top 200 markets. "Such a combination would significantly expand the network service area available to the subscribers of both companies and would better position the combined company to more aggressively compete with the other national wireless carriers," the very open letter continues.

It's hard to argue that the two companies are anything less than a natural fit. Both MetroPCs and Leap charge flat monthly fees for unlimited cell calls - rather than chaining customers to longterm contracts a la Verizon or AT&T. MetroPCS is sure that a merger of the two like-minded operations would only make them more efficient.

"Based on our preliminary analysis, we believe that the combined company would achieve significant operating cost savings through a combination of market-level operating efficiencies and corporate overhead reductions," the MetroPCS says. "MetroPCS' and Leap's existing market operations are complementary, and we believe that the combined company, as a result of the expanded service area, would likely benefit from incremental improvements in customer penetration and retention."

The PCSers think this could save two companies as much as $2.5bn. What do the Leapers think? Who knows. The company won't respond to our requests for comment. ®

HP ProLiant Gen8: Integrated lifecycle automation

More from The Register

next story
Yorkshire cops fail to grasp principle behind BT Fon Wi-Fi network
'Prevent people that are passing by to hook up to your network', pleads plod
Major problems beset UK ISP filth filters: But it's OK, nobody uses them
It's almost as though pr0n was actually rather popular
Microsoft unsheathes cheap Android-killer: Behold, the Lumia 530
Say it with us: I'm King of the Landfill-ill-ill-ill
All those new '5G standards'? Here's the science they rely on
Radio professor tells us how wireless will get faster in the real world
Apple orders huge MOUNTAIN of 80 MILLION 'Air' iPhone 6s
Bigger, harder trouser bulges foretold for fanbois
US freemium mobile network eyes up Europe
FreedomPop touts 'free' calls, texts and data
'Two-speed internet' storm turns FCC.gov into zero-speed website
Deadline for comments on net neutrality shake-up extended to Friday
Oh girl, you jus' didn't: Level 3 slaps Verizon in Netflix throttle blowup
Just hook us up to more 10Gbps ports, backbone biz yells in tit-for-tat spat
prev story

Whitepapers

Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Reducing security risks from open source software
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Consolidation: the foundation for IT and business transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.