Leap Wireless shareholders have overwhelmingly approved a $1.2 billion merger with AT&T. More than 99% voted to approve the merger, which could have been the last remaining hope for Leap. They currently have $2.8 billion in debt. With that debt, AT&T is incurring Leap for about $4 billion.


If you’re wondering why AT&T would essentially overpay for a small carrier, it has to do with two things: spectrum, and forgiving debt. While AT&T might be spending $4 billion for Leap when it’s said and done, Leap has roughly $4.8 billion in write downs hat can be counted against future profits.

The spectrum is little less complex. Leap owns a prized 700MHz “A block” in the Chicago area, which they purchased in 2012 for $204 million. Leap also has an LTE network covering 21 million people in major metropolitan areas, which will help AT&T with their current rollout. Leap operates a CDMA network under the Cricket brand, so AT&T will also have to do a little tweaking to towers as well as support that legacy technology for Leap customers.

The deal is subject to the normal FCC and Department of Justice scrutiny, but shouldn’t be an issue. This doesn’t seem to pose a threat to any of the major carriers, so we can’t foresee any issues moving forward. No timeframe was given for a completed transition, either.

VIA: Cellular News

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