Leap Teams with Clearwire - Analyst Blog
March 15 2012 - 11:59AM
Zacks
In order to provide enhanced service to its pre-paid customers
Leap Wireless International Inc. (LEAP), which
mainly operates in the low-end wireless market, entered into a five
year contract with Clearwire Corporation (CLWR),
which provides wholesale Long Term Evolution (LTE) support to
different telecom carriers.
The launch of Muve Music, which offers unlimited music download
facilities for 3G wireless subscribers, has created huge demand
among users. The company also gained nearly 413,000 subscribers in
fiscal 2011, up 65.9% year over year. So in order to maintain
smooth network traffic across its network as well as to offer
faster downloading service to its customers, LEAP teamed up with
Clearwire to offer LTE support to its users.
Earlier in 2011, LEAP entered into an agreement with
LightSquared to provide roaming service across its LTE 4G networks.
However, the deal seems to be a distant dream as it is believed
that LightSquared’s network is violating the GPS navigation
standard installed in the mobile devices.
In 2010, LeapWireless entered into a $300 million 5-year roaming
wholesale agreement with Sprint Nextel Corp. (S).
Through this agreement, the company’s wholly-owned subsidiary
Cricket will offer its products and services using Sprint Nextel’s
3G networks.
We believe that management’s plan to postpone its LTE roll out
stems from the fact that 4G/LTE network deployment requires huge
set-up costs. Moreover, it also requires huge spectrum, which will
further bolster the cost for LEAP Wireless. Furthermore, higher
demand of smartphones and tablets has induced increased network
usage. So in order to seize the current opportunity of upgrading
their service quality, which will help them to gain as well as
retain subscribers, LEAP partnered Clearwire and Sprint at a much
less cost as compared to the acquisition of spectrum license.
We maintain our long-term Neutral recommendation forLEAPWireless
International Inc. Currently, LEAP has a Zacks #3 Rank, implying a
short-term Hold rating on the stock.
Based in San Diego, California, Leap Wireless International Inc
provides digital wireless communication services in the U.S. under
the “Cricket” brand primarily through its wholly-owned subsidiary
Cricket Communications Inc.
CLEARWIRE CORP (CLWR): Free Stock Analysis Report
LEAP WIRELESS (LEAP): Free Stock Analysis Report
SPRINT NEXTEL (S): Free Stock Analysis Report
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