Cricket provider Leap Wireless (NASDAQ:LEAP) will look to strike LTE roaming deals with other carriers to fill in the gaps in its coverage as it focuses on building out LTE to the parts of its network where it will generate a strong return, according to a Leap executive.
James Seines, vice president and treasurer at Leap, said Thursday at the Deutsche Bank Leveraged Finance Conference that LTE investments "will be made with a very strict focus on return" and that Leap is "also looking at partnerships and collaborations with other wireless carriers to bring that service to our customers."
"We think there is a much more efficient way to do that than simply devoting a significant portion of our capital resources and a significant portion of our balance sheet" to building out a greenfield LTE network. He said that Leap will deploy LTE in certain portions of a market where it can generate a strong return on the invested capital and that it will "partner with others to bring the services to the lower-return portions of the market."
Such a deal would not be unprecedented for Leap, which signed a 3G CDMA wholesale agreement with Sprint Nextel (NYSE:S) in 2010. The agreement allows Leap--a regional wireless carrier headquartered in San Diego--to take its offerings nationwide, beyond the markets where it operates its own network. Leap also inked a deal with Clearwire (NASDAQ:CLWR) to offload LTE traffic onto Clearwire's planned TD-LTE network. Clearwire plans to launch its LTE network next year.
Leap plans to begin turning on its LTE network starting next week. The carrier said it will flip the switch on one LTE market next week and will then announce additional markets in November. Leap spokesman Greg Lund told FierceWireless the carrier plans to have 21 million POPs covered by year-end and two-thirds of its current network footprint, or around 60-65 million POPs, covered with LTE by 2015. Leap's LTE market launch next week will be supported by a broadband-only device, the Huawei Boltz modem. In November, Lund said Leap will add two LTE smartphones to its lineup, though he declined to provide details. Leap launched an LTE test market in Tucson, Ariz., at the end of 2011.
On the merger-and-acquisition front, Seines said that Leap continues to think that consolidation "is really the likely path for this industry and it's probably the best path for this industry. Having a large number of carriers in today's environment is not the best path. So we think consolidation makes sense."
Deutsche Telekom is trying to have its T-Mobile USA subsidiary acquire Leap rival MetroPCS (NYSE:PCS). Separately, Japan's Softbank is in discussions with Sprint for a possible acquisition of Sprint.
Seines also reiterated comments Leap CFO Jerry Elliott made in August after Leap reported a disastrous second quarter. Elliott said Leap will review all of its options, up to and a sale. Yet Seines said Leap is focused on generating cash and running its business. "We're building this business for the long term and we're confident it will be successful," he said.
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