In my last article about Wireless (Evolution of the Wireless Landscape) I talked about the coming consolidation of the wireless carriers in the U.S. One of the carriers I predicted would be picked up by a bigger fish….is in the process of getting picked up. Leap (Cricket) is getting a $1.2 Billion buyout handed to it by AT&T. I know, I said that Sprint should buy them and I stand by that.
It makes more sense for Sprint (Sprint-Softbank) to buy Cricket because of the huge wholesale agreement between the two companies, because Cricket operates on a CDMA network that would easily integrate with Sprint’s current network, and because it would have been a cheap buy for Softbank. Oh well, AT&T got there first. That’s not to say that Softbank won’t throw in an offer just to spice things up, which they should.
So AT&T is putting up $1.2 Billion to buy Leap’s wireless assets, retail stores, licenses, and of course customers. Just to put it in perspective AT&T is paying $259 per customer compared to Tracfone paying approximately $100 per customer to acquire Simple Mobile. Consider the fact the Simple Mobile didn’t have network assets, company owned retail locations, and probably didn’t have licenses that compared to Cricket’s. So, in the end, I would guess that the Cricket customer is worth not much more than the Simple Mobile customer, if not less….
What’s in it for AT&T? In my mind, it would be that they don’t want Sprint to get them first. At the time of announced buyout Cricket had 4.63 million customers, which brings AT&T just a tad closer to Big Red (Verizon), so now they are only about 15 million customers apart (depending on where the customer count comes from). The reality of the situation is that network capacity is scarce, or so we’re told, and the best way to gain more is to buy up the competition and re-tool their spectrum to suit your needs. With all this 4G and LTE talk going around, all of the carriers are scrounging to re-farm, re-tool, re-everything their networks to give customers “more faster mobile data”.
With the deal expected to close in the next 6-9 months, we’ll see who throws their hat in the mix (hint hint Sprint). Like I said in my last article, consolidation is going to happen out of the necessity to grow. But let us just remember that when these companies become too big the consumer gets less choice.