San Diego Business Journal

Leap Wireless Reports $640.8M Loss for 2013 as Sale to AT&T Looms

By Mike Allen Sunday, March 9, 2014

Leap Wireless International Inc., the San Diego-based flat-rate cellphone service doing business as Cricket, made its final annual report before it completes its sale to AT&T Inc. later this month, showing a stunning $640.8 million net loss last year, compared with a net loss of $189.3 million for 2012.

The net loss attributable to common shareholders came out to $8.20 per diluted share, compared with a net loss per diluted share of $2.45 in 2012, according to its annual filing with the U.S. Securities and Exchange Commission.

Leap’s total revenue last year was $2.9 billion, down from $3.1 billion in 2012.

Leap’s hefty loss decimated its shareholders’ equity to a negative $194 million, meaning its liabilities exceed its assets.

Nevertheless, all this accounting likely won’t have any effect on the pending $4 billion sale of the business to AT&T (NYSE: T), announced in July 2013.

Under the contract, Leap’s shareholders stand to receive $15 for each common share they own, plus a right to a share of the sale of some spectrum licenses. The aggregate price AT&T is paying comes to $1.2 billion; adding Leap’s net debt of $2.8 billion, the total is about $4 billion.

Leap’s (Nasdaq: LEAP) share price on March 7 was $17.37, giving the company a market capitalization of $1.38 billion.

As of the end of December, Leap reported total customers of 4.5 million, down from 5.3 million at the end of 2012.

Leap said in its securities filing that the customer losses were caused by more intense competition in its markets, particularly from T-Mobile’s MetroPCS service and other national carriers targeting the pre-paid cellphone segment, as well as more customers seeking 4G data services and more expensive phones.

In the report, Leap said it expects the sale to close by March 31.

When the sale was announced last year, AT&T said it plans to retain the Cricket brand, use its distribution channels and expand its presence to other cities.

Leap, which was spun off from Qualcomm Inc. (Nasdaq: QCOM) in 1998, has about 3,400 employees, including about 400 in San Diego.