Leap Wireless Combines its Cricket Service With Pocket Communications in South Texas

2/23/10Follow @bvbigelow

Call it an example of newfound pragmatism among the flat-rate wireless service providers, which are coming under growing pressure to consolidate.

San Diego’s Leap Wireless (NASDAQ: LEAP) announced today that it’s forming a “joint venture” with San Antonio, TX-based Pocket Communications that will provide pre-paid wireless services to customers of both companies in South Texas. As joint ventures go, however, this one clearly puts Leap in the driver’s seat.

Under the agreement, Leap, the operator of the Cricket wireless network, will own 76 percent of the joint venture and will manage wireless services in a region that extends from San Antonio to Laredo and includes the Rio Grande Valley. “As one step in the transaction,” the company says in a statement, “Leap will purchase some of Pocket Communications’ South Texas assets for approximately $38 million in cash.” Leap says it also will contribute its own assets in South Texas to the joint venture—along with the remainder of Pocket’s assets. (Pocket Communications, which also serves areas of Massachusetts and Connecticut, says its New England operations are not included in the deal.)

Other terms of the deal make the joint venture sound more like a de facto acquisition. Leap says that after the joint venture has operated for three and a half years, the two partners will gain certain rights to Pocket’s 24-percent stake. And if Leap gets acquired or merges with another company—which is a much-rumored possibility—Pocket will be obligated to sell its stake in the joint venture.

Speculation about a Leap M&A deal erupted in January, after the Wall Street Journal reported that Cricket’s parent company had hired investment bankers to advise it on its strategic options. I called Leap spokesman Greg Lund to ask if those bankers … Next Page »

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • Rob

    I think its a great idea because now Cricket is growing but instead of seeing 2 companies becoming one I would rather see more of them popping up. I want the big boys Sprint and so on to lose tons of money. I mean for years they have be screwing people and I mean flat out screwing them and I will tell you it is so much cheaper to operate cell phones then it is to lay land lines so I hope they get crushed by a new wave of people that don’t want to be ripped off. God bless America!

  • Richard

    Its sad to me cause pocket has better phones and you can take basically any phone to be flashed and switched. But I wish Cricket offered better phones!!!!!!!!!!!