Reuters: Global Markets: Leap Wireless shares rise on talk of AT&T deal

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Leap Wireless shares rise on talk of AT&T deal May 11th 2012, 17:28 NEW YORK | Fri May 11, 2012 1:28pm EDT NEW YORK (Reuters) - Shares of Leap Wireless International rose 11 percent on Friday as investors bet that the company could be bought by No. 2 U.S. mobile provider AT&T Inc even as analysts questioned the logic of such a deal. In recent months, AT&T (T.N) has held talks to buy smaller rival Leap Wireless International (LEAP.O), people familiar with the matter told Reuters. Analysts said that the story had led investors to push up the company's share price, but some questioned whether such a deal would make sense for AT&T from the point of view of cost and regulatory scrutiny. "If AT&T was to look at Leap it would be (for) the spectrum" said BTIG analyst Walter Piecyk, but he worried that such a deal would be too expensive when compared with the $3.9 billion that market leader Verizon Wireless agreed to pay for spectrum owned by cable operators. Leap Wireless, which focuses on pre-paid wireless services, has a market value of more than $400 million and $3.2 billion of long-term debt. On top of price, Piecyk said, AT&T should worry about regulatory approval of such a deal since the U.S. government last year blocked its $39 billion plan to buy smaller rival T-Mobile USA. "If you're AT&T and you were just slapped back by the Federal Communications Commission and the Justice Department on T-Mobile USA would you try again so soon and would you waste a bullet on Leap when they don't have spectrum in the markets where AT&T needs it most?" Piecyk said, referring to such major markets as New York and San Francisco. Leap shares were up 59 cents, or 11 percent, at $5.95 on the Nasdaq in early afternoon trade. (Reporting By Sinead Carew) Link this Share this Digg this Email Reprints

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