Leap to launch LTE in 2011, taps LightSquared for roaming
Leap Wireless International, the parent company of Cricket Communications, plans to begin offering LTE services this year and says it will use LightSquared's wholesale LTE service for roaming.
The news sent Leap's stock soaring more than 15 percent in morning trading on the New York Stock Exchange.
Leap will become the fourth U.S. operator to launch LTE services behind Verizon Wireless, Metro PCS and AT&T, which plans to start commercial LTE services this summer.
"We believe that the broad coverage resulting from this business agreement will enhance our ability to offer compelling products and services and allow us to strengthen our retail relationships and distribution capabilities," said Leap President and CEO Doug Hutcheson in a statement. "It will also give us flexibility to access additional 4G capacity where needed as data-centric devices become more popular and require more and more bandwidth."
Financial terms of the contract between Leap and LightSquared were not announced, but the companies characterized the deal as a "long-term" agreement. The deal marks LightSquared's first major carrier customer for its hybrid satellite-terrestrial LTE network.
Leap did not specify when it would begin offering LTE roaming on LightSquared's network, which is still being built by Nokia Siemens Networks. The deal should provide a much-needed influx of cash to LightSquared, which has only raised about $2 billion of the $7 billion needed to construct the network under the terms of its contract with Nokia Siemens.
"We are fully committed to delivering our roaming services on time and with the quality, speed, coverage and capacity required to support Leap's business needs," said LightSquared CEO Sanjiv Ahuja in a statement.
The LTE roaming agreement with LightSquared will give Leap's customers nationwide access to LTE services, helping Leap to stay ahead in the highly competitive prepaid space.
Leap has been working to make its services more attractive to customers in an effort to improve its financial performance, which continues to be weighed down by repeated losses despite improvements in revenue. The company has revamped its rate plans, expanded its device lineup and launched nationwide 3G data coverage. Leap has also started an unlimited music service, Muve Music, which provides customers with unlimited music downloads.
Leap announced its preliminary first-quarter results yesterday, adding new customers and posting slight improvements in churn and ARPU.
The company added 300,000 new customers in the first quarter, an improvement from last quarter, when the bulk of the company's net adds came from its acquisition of Pocket Communications. Leap posted 107,000 net customer additions and gained 323,000 subscribers from its acquisition of Pocket Communications in the fourth quarter of 2010.
The company also managed to cut churn by one-tenth of a percentage point to 3.5 percent and said ARPU continue to increase, though Leap didn't provide any specific numbers on ARPU. If Leap does post improved ARPU numbers in the first quarter, it will mark the company's third sequential quarter of ARPU growth.
Leap did not provide any guidance about its net income, though it said its operating income before depreciation and amortization (OIBDA) will "reflect strong customer activity." Leap is expected to release its complete first quarter earnings in early May.