Leap Wireless and Pocket Communications Complete Formation of Joint Venture to Provide Expanded South Texas Region Mobile Communications Services
October 05, 2010 (PRLEAP.COM) Lifestyle NewsLeap Wireless International, Inc. (NASDAQ: LEAP), a leading provider of innovative and value-driven wireless communications services, and Pocket Communications, today announced they have formed a Leap-controlled and managed joint venture that provides enhanced mobile communications through Leap's Cricket® brand to customers in the South Texas region, from San Antonio to Laredo and in the Rio Grande Valley covering more than 4.4 million potential customers. The agreement to form the joint venture was announced February 23, 2010.
Leap, which offers unlimited, pre-paid mobile voice, text and Web, as well as mobile broadband service through Cricket, had approximately 5.3 million customers across the nation at the end of the second quarter of 2010, including approximately 430,000 in the South Texas region. Pocket Communications, which offered similar unlimited prepaid cell phone plans, had approximately 340,000 customers in the South Texas region at the end of the second quarter of 2010.
"This joint venture demonstrates the possibilities in prepaid wireless now that the consumer-driven movement to value has reached a tipping point: combining Pocket with Cricket's existing base gives us approximately 18 percent of the wireless market in that region. That is very significant, real penetration," said Doug Hutcheson, Leap's president and chief executive officer. "This joint venture, which we expect will deliver significant value to our shareholders, is consistent with our strategy of improving our ability to compete by increasing our overall strength and scale."
The joint venture has acquired substantially all of Pocket Communications' and Cricket's wireless licenses and operating assets for the South Texas region. Leap now owns approximately 76 percent of the joint venture and Pocket Communications owns approximately 24 percent. Leap first purchased some of Pocket's South Texas assets for approximately $38 million in cash, which Leap then contributed to the joint venture together with its own South Texas assets. Pocket contributed the remainder of its South
Texas assets to the joint venture directly. The companies have certain put and call rights on Pocket's interest in the joint venture which generally commence after 3-1/2 years. In addition, Pocket will be obligated to sell its interest in the joint venture to Cricket in the event of a Leap change of control.
Leap provides innovative, high-value wireless services to a fast-growing, young and ethnically diverse customer base. With the value of unlimited wireless services as the foundation of its business, Leap pioneered its Cricket® service. The Company and its joint ventures operate in 35 states and hold licenses in 35 of the top 50 U.S. markets. Through its affordable, flat-rate service plans, Cricket offers customers a choice of unlimited text, voice, data and mobile Web services. Headquartered in San Diego, Calif., Leap is traded on the NASDAQ Global Select Market under the ticker symbol "LEAP." For more information, please visit www.leapwireless.com.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect management's current expectations based on currently available operating, financial and competitive information, but are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those anticipated in or implied by the forward-looking statements. Our forward-looking statements include our discussions regarding our expectation of generating future taxable income and deriving future benefits from our NOLs and are generally identified with words such as "believe," "expect," "intend," "plan," "could," "may" and similar expressions. Risks, uncertainties and assumptions that could affect our forward-looking statements include, among other things, our ability to generate future taxable income and realize the benefit of our NOLs and other factors detailed in the section entitled "Risk Factors" included in our periodic reports filed with the SEC, including our Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, filed with the SEC on August 6, 2010.
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