Leap looking for devices, coverage to boost 2010

Leap Wireless International Inc. is using 2010 to catch its breath, or at least that was the sentiment from its CFO Walter Berger who spoke this morning at Goldman Sachs’ Inaugural Technology, Media & Telecom Leveraged Finance Conference. Berger noted that the company spent 2009 aggressively building out a number of top markets using the AWS spectrum the carrier acquired in 2006, but has no plans to add any additional sizeable markets for this year.
Berger did note that the company’s recent acquisition of Pocket Communications helped fill in the carrier’s coverage in South Texas.
Instead, Leap is planning to refine its offering and allow customer adoption to catch up with the carrier’s recent growth and reduce “operational complexity in 2010.” The company ended 2009 with approximately $550 million in cash and cash equivalents.
This does not mean that Leap is set to take the year off. The carrier recently unveiled new pricing plans designed to take advantage of roaming agreements that expanded the carrier’s in-network, unlimited calling plans from 190 million potential customers covered to around 270 million pops covered. The new plans now offer unlimited nationwide calling plans starting at $30 per month. The new plans also followed updates earlier this year instituted by rivals MetroPCS Communications Inc. and Sprint Nextel Corp.’s Boost Mobile division.
“Consumer awareness of prepaid is growing,” Berger noted, adding that the wealth of marketing highlighting the space from a number of operators is allowing the overall prepaid market to grow.
Leap is also planning to bolster its handset lineup with additional 3G devices to take advantage of its network as well as to entice consumers looking for something beyond a traditional handset in the prepaid space. Leap has announced plans to launch Kyocera Wireless Corp.’s Zio smartphone later this year, which will be its first device powered by Google Inc.’s Android operating system, as well as to begin offering Research In Motion Ltd.’s Blackberry Curve. The carrier expects roughly half of its handset portfolio to include 3G devices by the end of the year.
As for network evolution plans, Berger noted that Leap would begin testing “4G” technologies this year and that it will be a “fast follower” into the space, but that it needed to make sure the economies of such a build out were right first. An LTE deployment for Leap would basically require the carrier to build out a new network thus its desire to follow other operators with similar plans, like Verizon Wireless and MetroPCS, and gaining any economies of scale it can gather.
In support of those network evolution plans, Berger said the company was comfortable with its current spectrum position, which he said was in excess of 20 megahertz in most of its markets. The only market that could see spectrum issues is Chicago, where Berger said the carrier had around 10 megahertz of spectrum. Initial LTE deployments will require at least 10 megahertz of clean spectrum for deployment, with most carriers looking to set aside closer to 20 megahertz to support expected consumer demand for higher-speed data services.
Berger refused to comment on ongoing rumors of a tie-up with rival MetroPCS Communications Inc. which have dies down a bit since reaching a deafening roar earlier this year.
Leap is scheduled to announce first quarter results on May 6.