AT&T Mobility (NYSE: T) plans to launch an upgraded version of the Cricket prepaid brand in the second quarter, according to AT&T CFO John Stephens. AT&T closed on its $1.2 billion acquisition of Leap Wireless' Cricket brand, and its 4.5 million customers, last month.
Speaking on the carrier's first-quarter earnings conference call, Stephens reiterated AT&T's plans to be "aggressive" in the prepaid market using the Cricket brand on AT&T's LTE network. He said AT&T will give Cricket a "national presence" with 3,000 distribution points across the country and will focus on simple plans and affordable devices.
AT&T is also taking advantage of the spectrum it got from Leap and is putting the carrier's unutilized PCS and AWS spectrum to use in its network immediately. Stephens said that process is not really going to require a lot of capital investment. The real pressure on capital expenditures will come next year as AT&T shuts down Leap's legacy CDMA network and converts Cricket customers to AT&T's GSM-based network. That transition process is expected to take around 18 months. Integration costs are expected to be about $1.2 billion over a two-year period, with about half of that expected in 2014, Stephens said.
Stephens noted that the Cricket brand and platform provides AT&T access to a "customer segment we haven't necessarily focused on in the past." Stephens also said that around 70 percent of new Cricket customers use smartphones.
As a result, Stephens said that it will be fairly simple and easy to transition Cricket customers to smartphones on AT&T's network. He said AT&T plans to give Cricket customers the used GSM phones that customers trade in through AT&T's Next handset upgrade program.
"It could be very opportunistic for us if we're able to figure out away to take our Next program trade-in and provide those kind of quality handsets to our prepaid customers, not only elevate the cost, but give them a real quality experience," Stephens said, according to a Seeking Alpha transcript of his remarks.
AT&T plans to shutter its existing Aio Wireless prepaid brand and merge it into the new Cricket brand. The new brand will be going toe to toe with established Sprint (NYSE:S) prepaid brands Virgin Mobile and Boost Mobile as well as multiple prepaid brands from T-Mobile US (NYSE:TMUS), including the MetroPCS brand. T-Mobile has been working to aggressively turn MetroPCS into a nationwide brand.
However, T-Mobile CEO John Legere said he's not worried about the extra competition from AT&T's Cricket. "Omg No...impaired brand and fat slow owner..they will only hurt themselves," Legere said on Twitter in response to FierceWireless questions about Cricket.
In February, T-Mobile said that it moved 3.5 million Metro customers, or around 40 percent of Metro's total customer base, off that carrier's aging CDMA network and onto T-Mobile's GSM-based network. T-Mobile also said that 25 percent of Metro's spectrum has now been refarmed into the T-Mobile network and that the migration was happening faster than it had anticipated.
As a result, T-Mobile has said that it will shut down MetroPCS' CDMA networks in Philadelphia, Las Vegas and Boston by the end of this year, a year earlier than expected.
- see this Seeking Alpha transcript
AT&T surprises in Q1, posts 625K net postpaid adds driven by phones, tablets
Cricket's Muve Music's fate is up in air following AT&T deal
Analysts: AT&T to roll out new Cricket prepaid strategy at the end of Q2
FCC approves AT&T's acquisition of Cricket provider Leap, with divestitures
Leap takes hit from T-Mobile, loses 27% of its customers in 18 months
Aritcle updated April 23 to clarify that AT&T plans to launch the new Cricket brand in the second quarter, not at the end of the second quarter. Article also adds additional commentary from AT&T.