SOURCE: Five Star Equities

Five Star Equities

October 17, 2012 08:20 ET

MetroPCS and Leap Wireless Shares Dip After Softbank/SprintNextel Deal Announced

Five Star Equities Provides Stock Research on MetroPCS and Leap Wireless

NEW YORK, NY--(Marketwire - Oct 17, 2012) - Japan's third-largest mobile carrier Softbank Corp. on Monday agreed to purchase a 70 percent stake in SprintNextel Corp. for approximately $20 billion. The deal will provide Sprint with a much needed influx of cash and enable them to become a major competitor to industry leaders AT&T and Verizon. Five Star Equities examines the outlook for companies in the Domestic Telecom Industry and provides equity research on MetroPCS Communications Inc. (NYSE: PCS) and Leap Wireless International, Inc. (NASDAQ: LEAP).

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Once the purchase is complete, by mid-2013, Softbank will become one of the world's largest telecom groups with roughly 90 million subscribers. The merger was the second announced this month as Deutsche Telekom AG owned T-mobile USA agreed to merge with MetroPCS. Analysts have speculated that Clearwire Corp. may be next in line.

"This is pro-competitive and pro-consumer in the U.S. because it creates a stronger No. 3... it competes with the duopoly of AT&T and Verizon. When you look at what Softbank has accomplished in Japan with the No. 3 carrier, it's something we can learn from," said Sprint Chief Executive Dan Hesse.

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MetroPCS provides a variety of wireless broadband mobile communications services to its customers on a no long-term contract, paid-in-advance basis. As of December 31, 2011, it had over 9.3 million customers. The company earlier this month agreed to merge with Deutsche Telekom's T-mobile USA for $1.5 billion. Combined the two companies would have a total of 42.5 million customers.

Leap's Cricket service offerings provide customers with unlimited wireless services for a flat rate without requiring a fixed-term contract or a credit check. Shares of the company fell nearly 20 percent after the T-Mobile USA/MetroPCS merger was announced. Analysts previously speculated that MetroPCS would consider purchasing Leap as it was also a major player in the prepaid market.

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