MetroPCS Interested in Combining with Leap, CFO Says
A combination with competitor Leap Wireless is appealing, MetroPCS Chief Financial Officer Braxton Carter said Wednesday, providing no specifics. “Obviously, we're very interested in the combination of our companies,” Carter said at an investor conference. Many potential benefits that made a merger attractive are no longer relevant now, but there are still many positive factors, he said. “It’s important to reevaluate what your options are.” He acknowledged fierce wireless pricing competition. Carter declined to comment further on whether the companies are in talks. Leap and MetroPCS dropped negotiations in 2007 after they couldn’t agree on price. Analysts had said a deal wouldn’t face significant regulatory hurdles but there would be significant regulatory, business and technology obstacles if one of the major national carriers agreed to buy Leap (CD Feb 3 p5).
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A deal won’t happen until the second half of 2011, Oppenheimer analyst Tim Horan said. The companies are pursuing growth plans independently, he said. MetroPCS is building out a network for high-speed wireless Internet and Leap recently entered into a joint venture with Pocket Communications. The companies are contending with a weaker market for their pay-as-you-go wireless services, and MetroPCS doesn’t have much competition for buying Leap, Horan said.
Some pricing changes made earlier this year have been received well by dealers and consumers, Carter said. The prepaid carrier revised its pricing plans to offer larger handset discounts and changed how it compensated its distributors. “We're happy with what we're seeing so far,” Carter said.
The company is focusing on major metropolitan areas and expanding into adjacent areas with communities of interest with major markets, Carter said, saying the company will stick to its low-cost structure. It believes adding VoIP to LTE data-only network is a software upgrade, he said. The company expects to have a majority of its markets covered by LTE in the second half of this year with additional market deployments next year, he said.