In tune with its philosophy that small is beautiful, Leap Wireless International Inc. has moved to extend its grip on small and rural communities across the United States by signing multiple agreements to acquire wireless operating licenses from CenturyTel that encompass 11 million customers.
Launching its foray into small-town America through its subsidiary Cricket Communications Inc., Leap bought personal communications services licenses valued at $205 million in markets like Fort Wayne, Ind.; Flint, Lansing and Saginaw-Bay, Mich.; Duluth, Minn.; and Appleton-Oshkosh, Wis. Leap said the areas cover 7 million potential customers.
Leap also bought licenses for an undisclosed sum covering about 520,000 potential customers in Evansville, Ind., and it also signed four memoranda of understanding to acquire about 3.5 million customers in Peoria, Ill.; Utica, N.Y.; Charleston and Huntington, W.Va; as well as other markets. It said it now has licenses that cover about 47 million potential customers in 31 states.
“We’ve been for the past two years acquiring licenses wherever possible directly on auction or indirectly in the aftermarket,” said Dan Pegg, vice president of public affairs.
Eyeing the feats of Southwest Airlines in the airline industry and Wal-Mart in retailing middle America, Leap’s ambition is to offer services to the two-thirds of Americans who do not yet have a wireless phone.
“We want to take it to any market we can as quickly as we can,” said Pegg.
Cricket offers a flat monthly rate of $29.95 with unlimited minutes of use within its local areas to place and receive calls. The company’s targeted demographics include college students, busy mothers, local business people and retirees.
Leap plans to bid in the upcoming auctions of wireless operating licenses scheduled for December 12.
Pegg said Leap often relies on after-market opportunities to buy new licenses because of FCC restrictions on negotiating for licenses during auctions.
“Opportunities are curtailed until after market,” he said.
He said Leap bought 35 licenses in the 1998 auction, its largest single spectrum acquisition.
CenturyTel, which is the eighth-largest local exchange telephone company based on access lines and eighth-largest cellular company based on population equivalents owned in the United States, said it sold the licenses to Leap because they are nonstrategic assets.
“We can accomplish the same level of service without additional service. We didn’t need the extra spectrum after all because of technologies developed since we had them,” said CenturyTel’s media relations coordinator Ginger Durrett.
She said CenturyTel sold the licenses to Leap because “they would have bought them if we sold them to someone else. We were going to have Leap as competition in these markets.”
She said CenturyTel has wireless licenses everywhere except Fort Wayne, Ind., and Flint, Mich.
CenturyTel’s communications services include local exchange, wireless, long-distance, Internet access and security monitoring to about 3 million customers in 21 states.
