Leap Wireless (NASDAQ:LEAP) will use LTE technology, at least initially, to enhance its 3G capacity, and likely will build "hotspots" of LTE coverage in some of its markets beginning next year.
Speaking at the UBS Global Media and Communications Conference, Leap President and CEO Doug Hutcheson said the company will begin to roll out 4G in 2011, and will increase its coverage in 2012 and 2013 as demand builds and devices become available.
But Hutcheson added that Leap isn't intent on building an LTE network by itself. "We are not focused on doing it ourselves," Hutcheson said. "There are alternatives out there that operate within our model." When pressed for details, Hutcheson said those alternatives include wholesale providers Clearwire (NASDAQ:CLWR), LightSquared and others, but did not elaborate further.
Thanks to a revamp of its rate plans in August, Hutcheson said Leap is seeing a significant upsurge in customers migrating to smartphones and selecting the firm's higher priced rate plan that offers unlimited voice, text and 1 GB of data for $55 per month.
Hutcheson said that in November smartphone buyers represented 40 percent of Leap's new customers. "We saw a big spike during Black Friday," Hutcheson said. "We had a very large percentage of customer upgrades."
As a result, Hutcheson said Leap's average revenue per user and churn metrics are improving. "We have seen a lot of churn improvement as we have given customers the option of an easier path to upgrade," he said.
In Leap's third quarter the company reported a churn rate of 5.5 percent, up from 5.4 percent at the end of third quarter of 2009. The carrier's average revenue per user was $37.02 during the period, down from the $39.60 Leap posted during the third quarter of 2009.
Interestingly, Hutcheson said the company is increasing its presence among big box retailers, citing its introduction of wireless broadband plans with Wal-Mart. He noted the growing importance of retailers in the wireless space, adding that two years ago national retailers accounted for about 4 percent of wireless gross adds and now they account for 26 percent of wireless gross adds. "We think [national retailers] are a fundamental piece to play."
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