Feeds

MetroPCS asks to swallow Leap Wireless

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

Choosing a cloud hosting partner with confidence

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. ®

Providing a secure and efficient Helpdesk

More from The Register

next story
Sea-Me-We 5 construction starts
New sub cable to go live 2016
Vodafone to buy 140 Phones 4u stores from stricken retailer
887 jobs 'preserved' in the process, says administrator PwC
BT claims almost-gigabit connections over COPPER WIRE
Just need to bring the fibre box within 19m ...
EE coughs to BROKEN data usage metrics BLUNDER that short-changes customers
Carrier apologises for 'inflated' measurements cockup
Comcast: Help, help, FCC. Netflix and pals are EXTORTIONISTS
The others guys are being mean so therefore ... monopoly all good, yeah?
Surprise: if you work from home you need the Internet
Buffer-rage sends Aussies out to experience road rage
EE buys 58 Phones 4u stores for £2.5m after picking over carcass
Operator says it will safeguard 359 jobs, plans lick of paint
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.