Regional operators disappearing in wake of industry consolidation

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The fate of the regional operator is in question in light of the recent consolidation in the U.S. wireless industry. Research firm iGR estimates that the number of subscribers serviced by regional operators has dwindled from 22.2 million in 2012 to 12.5 million today. And with AT&T Mobility's (NYSE:T) planned $1.2 billion acquisition of Leap Wireless (NASDAQ:LEAP), that number will likely drop to 8 million or fewer by the end of 2013.

According to iGR, there have already been two major acquisitions and consolidations this year that have significantly reduced the number of subscribers that are handled by regional operators.  

First, T-Mobile US' (NYSE:TMUS) acquisition of MetroPCS, which closed in early May, moved MetroPCS' 8.99 million subscribers to T-Mobile, giving T-Mobile a total subscriber base of around 43 million.

Second, Sprint's (NYSE:S) $480 million purchase of spectrum and markets from U.S. Cellular (NYSE:USM) impacted about 420,000 subscribers. Those subscribers will likely move to Sprint or another Tier 1 operator, iGR said.

And on Friday, AT&T announced plans to acquire Leap Wireless, which has long been considered an acquisition target. That deal, which still requires approval by the FCC and the Department of Justice, is expected to close in the next six to nine months. AT&T said the deal will give it approximately 5 million prepaid subscribers.

C Spire, U.S. Cellular, ATN, Ntelos and Cincinnati Bell are among the last of the major Tier 2 wireless carriers that are still independent. Combined these carriers count around 7 million subscribers.

The Competitive Carriers Association, previously called the Rural Cellular Association and which represents all but the nation's two largest carriers, is evaluating the AT&T/Leap transaction to determine its impact on the industry. "The transaction will have to be evaluated against the normal competitive measurements, as there is always concern with further consolidation in the industry.   While further consolidation in the industry is increasingly harmful to consumers, competitive issues, such as access to useable 4G spectrum, data roaming and interoperability must be resolved for remaining carriers to provide viable alternative service offerings for consumers.   As the transaction moves forward, I would expect interoperability to be high on our priority list of conditions, and we will be closely monitoring details of the transaction as they unfold," said Steve Berry, president of the CCA.

For more:
- see this iGR release

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Updated: This story was updated on July 15 to include a comment from the CCA.