Leap Wireless International Inc. said it will purchase the Dayton, Ohio, personal communications services license from PCSDevCo Inc.
Leap said the acquisition, pending Federal Communications Commission approval, will add more than 1 million potential subscribers to its holdings.
The Qualcomm Inc. spinoff plans to offer a limited mobility Code Division Multiple Access service targeted at the mass consumer market for a flat monthly rate in the United States. Leap, operating in the United States under the name Cricket, already offers such a service in Chattanooga, Tenn., through Chase Telecommunications. Leap has an agreement that calls for ChaseTel to control the business until Leap can acquire the company.
The FCC in July conditionally granted Leap designated-entity status, allowing it to purchase licenses from AirGate Wireless L.L.C. in North and South Carolina along with 36 C-block PCS licenses the carrier bid on in the recent C-block re-auction.
The conditions imposed by the FCC included adjusting Qualcomm’s potential equity holdings in Leap, reducing the level of reliance on its Qualcomm credit line within 18 months, removing certain Leap commitments to use cdmaOne technology in the United States and altering the equipment procurement agreement between Leap and Qualcomm.
Leap indicated that a competitor also has filed an application for review of the FCC’s order. Other DE carriers like Cook Inlet Region Inc. protested to the FCC earlier this year, saying Leap remained too closely tied with Qualcomm to qualify as a DE.
Morgan Stanley Dean Witter initiated coverage of Leap last week with an “outperform” rating, setting a $30 price 12-month target. The firm cited the San Diego company’s compelling valuation and strong management.
Leap shares jumped 42 percent on that news Monday, soaring $6.25 to $20.94 on volume of 2 million shares.
