Telecom: Network Grows Despite Slump in Stock
Coverage is expanding but shares are slumping at Leap Wireless International, Inc.
The San Diego-based wireless telecommunications carrier has spent the summer expanding into some major U.S. markets, intent on pushing its customer count to 1 million by the end of the year.
Yet investors have been skittish since July 25, when the company reported results from the first half of the year.
Leap offers flat-rate, no-roaming, “all you can talk” wireless service. It debuted in Denver on Aug. 15. Leap brought Phoenix into its network Aug. 9 and Pittsburgh into its network during mid-June.
They are metropolitan areas with far more potential customers than Nashville and Chattanooga, the small cities where Leap first offered domestic service.
The company reported $47.8 million in revenues for the second quarter, which it ended with 472,000 customers.
Yet shares in Leap Wireless generally declined in value in the month after the company announced its second quarter results.
Reuters and other news services have attributed the decline to investor fears that Leap may not make $120 million in revenues during its fourth quarter.
The company must make that amount under the credit deals it has with its equipment vendors, according to published reports.
Leap reported a net loss of $128.5 million on revenues of $47.8 million for the quarter ended June 30, 2001.
It had a net income of $234 million on revenues of $18.5 million in the year-ago quarter.
Leap’s stock closed at $31.36 on July 24, then closed at $25.04 on July 25 after heavy trading.
The stock closed at $17.44 per share on Aug. 22.
Leap’s latest market, Denver, is its 26th domestic market. Company officials have said they hope to add more markets by the end of the year.
In other recent news:
– Leap announced July 31 it had sold half of its spectrum in Salt Lake City and Provo, Utah, to Cingular Wireless for $140 million in cash. The company’s remaining 15 megahertz of spectrum in the area is enough to accommodate Leap service, the company said in a statement.
– Leap rolled out service in Spokane, Wash.; Fort Smith, Ark.; Columbus and Macon, Ga. and Hickory, N.C., in the second quarter, along with Pittsburgh.
– Leap reported July 25 that it owned, or had rights to acquire, licenses in areas with 72.7 million potential customers. That count, however, includes some licenses in dispute.
Leap bid for those licenses, covering 22.4 million potential customers, in a Federal Communications Commission auction that ended in January. However, the licenses’ former owner, NextWave Telecom, has gone to court to get them back.
– On July 25, Leap reported it had increased its investment in Pegaso, a Mexican wireless carrier the company helped found, by $29 million. Other shareholders increased their investments as well, so Leap’s 20.1 percent stake in Pegaso remains the same.
