MetroPCS Eyeing Leap Wireless

Rebuffed in its attempt to acquire Leap Wireless three years ago for $5.2 billion, MetroPCS Communications may be able to acquire Leap for much less today, because Leap is now reported to be willing to make a partnership deal or even sell out.

According to several media reports, Leap has hired investment banking firms to explore selling the firm or forming a strategic partnership with another mobile phone provider. Leap and MetroPCS have long been considered an ideal combine because they each offer similar pre-paid services and serve different geographical customers. Leap is strongest in rural areas while MetroPCS is strong in urban areas.

A combination of the two would create a new nationwide wireless carrier. Neither firm has responded to inquiries about a possible linkup. The stocks of both firms rose on the initial report that Leap had hired financial advisors.

Verizon Wireless and AT&T, the two dominant mobile carriers, aren't considered likely to acquire Leap, because regulators would be expected to frown upon either deal. Investment banking analysts have speculated that other possible acquirers could be Sprint Nextel, T-Mobile or America Movil.

Leap has kept up with the latest mobile technologies and its Cricket pre-paid service has been a success with consumers. But the competitive mobile phone environment has made business difficult for all carriers with the result that consolidation on an industry-wide basis is expected to continue. Leap and its joint ventures operate in 35 states and the District of Columbia. It has licenses in 35 of the top 50 U.S. markets, according to the company.

Like MetroPCS, Leap has about 2% of the U.S. wireless market.

In 2007, MetroPCS pulled its $5.2 billion offer to acquire Leap after the latter firm rebuffed a deal. An acquisition of Leap at its current stock price could be accomplished for less than $2 billion.