AT&T Completes Leap Acquisition, Sprint Prepaid Brand Launches

Prepaid is where the growth is, and every carrier is doing what it can to get a bigger piece of the no-contract market.


AT&T has completed its acquisition of prepaid carrier Leap Wireless, which operates the Cricket brand. For its payout of $15 a share, or approximately $1.2 billion, AT&T will receive Leap's wireless properties, network assets, retail stores and 4.57 million subscribers.

In addition to gaining a surer hold of the prepaid market—a move that will help AT&T better compete against T-Mobile—AT&T was also attracted to Cricket's spectrum holdings, and has acquired spectrum covering the PCS and AWS bands.

AT&T said the spectrum covers 138 million people, and includes unutilized spectrum covering 41 million people. Just as T-Mobile acquired prepaid carrier MetroPCS and began the process of transitioning MetroPCS' users to its updated and more efficient 4G network, AT&T will begin transitioning Cricket subscribers to its 4G network and putting the unutilized spectrum to work for its 4G LTE services.

AT&T, in a March 14 statement, said it plans to launch a "new Cricket," to "shake up the no-contract segment with a combination of simple, low-cost rate plans; a terrific lineup of smartphones; and a great network experience." AT&T plans to complete its migration of Cricket customers within 18 months of launching the new Cricket.

Before approving the deal, the Federal Communications Commission (FCC) made AT&T agree to sell off some Leap spectrum in 12 markets, mostly in Texas and Nevada.

Consumer advocacy group Public Knowledge said this was a partial win for consumers.

"Although we're pleased the Commission has required specific spectrum divestitures of AT&T in accordance with its existing policies, this proceeding highlights the need for new policies that better address the problem of spectrum consolidation," John Bergmayer, a senior staff attorney with Public Knowledge, said in a statement.

"The removal of Leap … from the marketplace is troubling," Bergmayer added, "because its low-cost, prepaid price plans are particularly attractive to low-income consumers. While, among other things, AT&T has committed to offering a $40, unlimited plan for feature phones for 18 months, the best guarantee of consumer protection is competition, not promises."

AT&T launched the prepaid brand Aio Wireless in May 2013 (and was shortly afterward sued by T-Mobile, which said the brand copied its magenta trademark color). In an August 2013 letter to the FCC, however, pleading its case for the Leap Deal, AT&T said it would scrap Aio if the Leap deal went through, folding the young brand into the more established Cricket name.

Verizon earlier this month updated its prepaid offer, introducing AllSet plans, and on March 14, Sprint introduced Sprint Prepaid, for customers who want "the control that comes with prepaying for the wireless service each month, the savings that come with paying for the device up-front with no long-term commitment contracts, and the benefit of being with the Sprint brand."

As with Sprint's Virgin Mobile and Boost Mobile prepaid brands, Sprint Prepaid customers won't be subject to a credit check.

The plan includes two offers, a $45 a month Smart plan, with unlimited talk and text and WiFi-enabled data; and a $60 a month Smart Plus plan, with unlimited talk, text and cellular data.

Sprint Prepaid customers with Android phones will also have access to a Sprint Money Express app, which will enable users to send money, deposit checks, pay bills and reload a Visa prepaid card that can be used where credit cards are accepted.

Sprint's offer follows a similar one, Mobile Money, offered by T-Mobile in January.

T-Mobile said at the time that the average family that relies on check-cashing services (instead of a traditional bank account) could save $1,500 a year with Mobile Money.