Leap Wireless International Inc. is finding that selling off its international properties has become more beneficial to shareholders than operating them.
Last week, Leap made a surprise announcement that it would sell its Chilean operator, Smartcom PCS, to Spanish utility company Endesa S.A. The company wasn’t looking to sell the carrier, but said it received a cash offer it couldn’t refuse.
“It was not an intended strategy, but was one that came up as we were seeking partners in Chile,” said Dan Pegg, Leap’s senior vice president of public affairs. “Through the exposure of that effort, Endesa came with an offer that was more beneficial to our shareholders than if we continued to operate.”
The sale comes about a year after Leap bought out its former partner, long-distance carrier Telex-Chile, for total control of Smartcom. Endesa’s purchase price won’t be revealed until the deal closes at the end of the month, said Pegg.
Similarly, Leap last August sold its wholly Australian owned subsidiary, OzPhone Pty. Ltd., to an affiliate of AAPT Ltd. for $16.3 million, saying the sale was more beneficial to shareholders than operating in that country. It pulled out of Russia for different reasons. Its operating partner there defaulted on loan agreements.
Today, Leap’s remaining international interest lies in Mexican operator Pegaso PCS, in which Sprint PCS recently acquired a stake.
But the company says it has not abandoned investing internationally.
“We don’t think any market is out of the question if the opportunities are right,” said Pegg. “We’ve certainly found a good deal of success and rewarding opportunities in Latin America.”
Leap said it will use the proceeds of the Chilean sale to accelerate the rollout of Cricket, its U.S. company offering flat-rate, local wireless calling plans in various markets. Cricket plans to launch 25 markets by the end of 2001 and is aggressively purchasing more licenses.
