MetroPCS, the Texan pre-paid specialist that has agreed to merge with larger rival T-Mobile USA in October, has made a renewed attempt to strike a deal for San Diego-based rival Leap Wireless International. According to Bloomberg MetroPCS disclosed that it had discussed the possibility of a merger with a third party in a regulatory filing dated 16 November, and a person familiar with the situation has now revealed that said party is Leap.
According to TeleGeography’s GlobalComms Database, back in September 2007 MetroPCS made a USD5.5 billion all-stock takeover offer for Leap, offering 2.75 of its own shares for every Leap share. MetroPCS also said it would assume around USD2 billion of its rival’s debt. However, Leap’s board rejected the offer that month, saying that it undervalued the company.
If T-Mobile USA is able to successfully conclude a merger with an enlarged MetroPCS – incorporating Leap – not only would it have added two of the country’s best known pre-paid carriers to its stable, it would also pose a serious threat to third-placed player Sprint Nextel in terms of market share. As at end-September 2012 Sprint claimed 18.2% of the US wireless market with 55.96 million subscribers. Meanwhile T-Mobile’s market share stood at 10.9% (33.33 million users), while MetroPCS claimed a 2.9% share (8.98 million customers), some way ahead of Leap’s 1.8% segment (5.63 million subscribers).