With auction complete, Metro and Leap may be closer
If there’s one topic I’ve talked about more than any other since the beginning of Prepaid Reviews, it has been the long-speculated merger of MetroPCS and Leap Wireless. Just for a quick timeline, the speculation started to boil over in September, when Metro put in an unsolicited bid for Leap. After weeks of hearing nothing, we finally got wind that Leap didn’t think the bid was sufficient. So they moved forward, and by the end of December they couldn’t even talk merger, because of the anti-collusion rules in the 700 MHz auction. But now that auction is done. So what does that mean for these two companies?
Financial services firm UBS goes out on a limb:
“A week from today, the non-collusion rules will lapse and auction participants will be able to have high-level discussions regarding future combinations,” UBS wrote in a note to clients. “We believe the long-expected merger between MetroPCS and Leap will move forward in a relatively short time frame.”
The presser doesn’t go into any further detail, but suffice it to say that the big carriers rolling out unlimited plans has something to do with the speculation. After speaking with people from Leap, I didn’t at all get the sense that any kind of merger was being considered. Then again, they still really can’t say, or even hint, anything to that regard, because of the auction rules.
My logic is as follows: Leap and Metro know their advantages over the major carriers’ unlimited plans: They’re much, much cheaper, and they include more services. They also know their disadvantages: That is, that neither has a nationwide network. By combining their current networks, plus their 2008 expansion plans, plus the licenses acquired by both in the auction, they would have a far-reaching network. Even if they jacked up their prices by $10 per month, they could still offer better services for a lesser price.
Of course, it’s more complicated like that when you’ve got numbers on paper. But intuitively, this makes all the sense in the world.
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