Report: MetroPCS hires advisers for possible Leap purchase

Prepaid wireless player MetroPCS hired a pair of high-powered investment banking firms to advise it on a potential purchase of longtime rival Leap Wireless, according to a Reuters report. Citing unnamed sources, the report said MetroPCS hired JPMorgan Chase & Co. and Credit Suisse for advice on the action.

Representatives from MetroPCS did not immediately respond to requests for comment. A Leap Wireless spokesman said the carrier does not comment on rumor and speculation.

The news comes just weeks after the Wall Street Journal reported that Leap Wireless 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. According to the report, the advisers have been talking with other wireless carriers, including AT&T Mobility and Verizon Wireless, about possibly buying Leap, but the talks have not led to any kind of deal.

A tie-up between MetroPCS and Leap has been a constant topic of discussion since Leap rejected a $4.7 billion takeover bid from MetroPCS in 2007. However, some analysts have discounted the likelihood of that marriage ever coming to pass, given the companies' reciprocal roaming agreement--inked in the fall of 2008--and their sometimes contentious relationship. But both operators have been stung by increased competition in the prepaid unlimited market by the likes of Sprint Nextel's Boost Mobile unit and TracFone's Straight Talk service.

Indeed, in the third quarter of last year Leap added just 115,000 subscribers and Metro added 66,000 subscribers--numbers paltry in comparison with their performance during the same period a year ago. Both Leap and Metro are scheduled to report fourth-quarter results Feb. 25.

Interestingly, it seems Wall Street doesn't have much interest in the latest twist in the long-running Leap-Metro soap opera; MetroPCS' stock remained relatively unchanged in trading this morning at around $6 per share, while Leap's stock rose slightly to around $15 per share.

In other MetroPCS news, law firm Robbins Umeda LLP said it launched an investigation into "possible breaches of fiduciary duty and other violations of state law by certain officers and directors at MetroPCS Communications." The firm said the carrier misled investors about its performance during much of last year. The firm said it it pushing a lawsuit filed on behalf of shareholders who owned MetroPCS stock between Feb. 26, 2009, and Nov. 4, 2009.

MetroPCS representatives did not immediately respond to requests for comment on the issue.

For more:
- see this Reuters article
- see this Robbins Umeda release

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