Leap outlines buildout plans, considers affiliate program

NEW YORK-Leap Wireless International Inc. is poised to make a large push into East Coast and Gulf Coast markets with the spectrum it acquired in the most recent federal spectrum auction, and also may consider an affiliate program to build out areas that don’t fit into the company’s strategy of building clusters of urban markets.
According to the presentation by Leap Chief Financial Officer Amin Khalifa at the Bank of America 2006 Credit Conference in New York, the carrier’s spectrum purchases opened up opportunities in markets along the Gulf Coast, from Corpus Christi, Texas, to Baton Rouge and New Orleans, La. East Coast cities where Leap expects to build new markets include Wilmington, Del.; Philadelphia, Pa.; Washington, D.C.; Baltimore, Md.; and Richmond and Norfolk, Va.
Other markets include Minneapolis, Minn.; St. Louis, Mo.; Oklahoma City; Las Vegas, Nev.; Chicago, Ill.; and Seattle, Wash. Leap and its designated-entity partner, Denali Spectrum Co., were high bidders on 100 licenses costing $984 million. The carrier’s first phase of buildout is already fully funded, according to the company, and is expected to start by the end of next year and extend into 2009. In general, Khalifa added, Leap plans to build out “as many of the large cities as fast as we can.”
In areas where Leap has excess spectrum that it is unlikely to use-the company purchased some multi-state licenses in the nation’s midsection that cover both urban and rural areas-Khalifa said that Leap would consider possible affiliate programs, or swapping or selling spectrum.
Khalifa also said that Leap is testing a $60 per month plan that includes 300 roaming minutes in three markets. The plan stands as a possible solution to the problem of customers who spend a significant amount of time outside the carrier’s footprint and leave as a result, pushing the carrier’s churn rate up. Leap’s new markets will help it to reduce its churn by upping the chances that customers who move will land in another Leap market, he added-and noted that Leap designed its business model in anticipation of relatively high churn.