AT&T to Buy Leap Wireless, Cashing Out Paulson's Telco M&A Bet
NEW YORK ( TheStreet) -- AT&T
AT&T will pick up Leap's Cricket brand name and about 5 million subscribers on its CDMA network, in Friday's proposed deal. Cricket customers may benefit from accessing AT&T's recently upgraded network, the company said.
"Cricket's employees, operations and distribution will jump start AT&T's expansion into the highly competitive prepaid segment," AT&T said in a statement.
The telco giant will also acquire valuable 4G LTE and AWS spectrum, in a move that helps to fulfill its network expansion efforts.
At this time 24 months ago, AT&T was lobbying with the Department of Justice to win approval of its proposed $39 billion merger with T-Mobile USA
T-Mobile acquired MetroPCS in October while, most recently, industry third player Sprint
Friday's proposed merger between AT&T and Leap Wireless comes at a near 90% premium to Leap Wireless' closing share price of $7.98 and signals the nation's biggest telecom by revenue believes the DoJ will allow it to be an aggressor in the wireless sector.
Consolidation among industry third and fourth players such as Sprint and T-Mobile may have altered market concentration figures and those surrounding all important wireless spectrum. Leap Wireless is also a regional service provider, a big contrast to T-Mobile, which is the industry's fourth biggest national player.
The DoJ has expressed an interest in fostering at least three or four nationally competitive wireless providers, meaning Leap may mark the twilight for the telecom sector merger wave.
For satellite TV giant Dish Network
Dish had been an aggressor in trying to win Clearwire from Sprint and Sprint from SoftBank. Recent proxy filings also indicate Dish Network was likely a suitor for MetroPCS and T-Mobile.
Sitting in the background of telecom industry consolidation are hedge fund titans who made savvy bets on a merger frenzy.
John Paulson of Paulson & Co. was chief among hedge funds in targeting potential wireless consolidators and has played a crucial role in the industry's realignment.
Paulson successfully lobbied for lower levels of debt in T-Mobile's acquisition of MetroPCS, a large holding, and he cast a crucial vote of support on SoftBank's efforts to win Sprint amid a heated fight put up by Ergen and Dish Network.