AT&T’s Leap Wireless deal is yet another sign of the sector’s consolidation

AT&T: Leap-ing forward.
AT&T: Leap-ing forward.
Image: AP Photo/Danny Johnston
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AT&T, the second largest US mobile carrier, has agreed to acquire smaller competitor Leap Wireless for $15 a share in cash. The deal, an important step for AT&T in its hunt for wireless spectrum, is another sign of consolidation in the US wireless telecom sector.

AT&T had been studying a Leap deal since late 2011, after its bid to acquire T-Mobile USA was under the threat of US government antitrust regulators. AT&T decided to drop the T-Mobile deal in December 2011 and has been hunting for other options (paywall) ever since. But it has proceeded cautiously to avoid another run in with regulators, according to sources. Uncertainty surrounding the 2012 US presidential election was another reason to move slowly, the sources added. The smaller deal with Leap, the sixth-largest wireless carrier in the US, is less likely to set off US government regulators than T-Mobile, the fourth-largest carrier.

All major US carriers have been on the hunt for deals to expand their spectrum, which they need to improve their networks due to increased video sharing on mobile phones. The AT&T deal comes after T-Mobile USA eventually merged with Metro PCS. Also this year, Japan’s Softbank acquired Sprint after fending off a rival bid from Dish Network.

Because Leap is a relatively small player, AT&T will likely be prowling for more spectrum. But closing a Leap deal with US government approval is a good start.