Leap forges JV with Pocket Communications
Cricket carrier Leap Wireless and regional, flat-rate wireless provider Pocket Communications are forming a Leap-controlled joint venture that will boost Leap's position in south Texas, where Pocket has a significant presence.
At the close of the deal, Leap will control 76 percent of the new venture, which does not yet have a name. Pocket will control the rest, but Leap will manage the venture. Leap also will buy some of Pocket's south Texas assets for $38 million. Leap spokesman Greg Lund told FierceWireless the companies expect the deal to close within four to six months.
Lund estimated the JV will bring operational synergies of between $20 million and $30 million. Leap struck the deal because of Pocket's position in the south Texas market. "South Texas is a very important market for us," Lund said. "Both companies have achieved pretty significant penetration rates. What this does is it allows us to create a stronger and more robust footprint that we feel will enable us to get more customers."
Pocket has about 320,000 customers in the south Texas region. Leap had around 5 million subscribers at the end of 2009, including around 400,000 in the south Texas region. As a result of the transaction, Pocket's customers in the area will get access to Leap's network as well as its Cricket broadband and PayGo handset offerings. After the close of the deal, Pocket will continue to provide service to its customers in New England under its own brand.
The deal comes as speculation mounts about Leap's future. Earlier this month, Reuters reported that Leap rival MetroPCS hired a pair of high-powered investment banking firms to advise it on a potential purchase of Leap. And that report came several weeks after the Wall Street Journal reported that Leap hired Goldman Sachs and formed a special committee of its board to consider various strategic options, including selling the company or merging with another carrier.
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