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AT&T Could Owe Sprint Millions Thanks to Leap Contract

Article Comments  8  

Nov 12, 2013, 12:37 PM   by Eric M. Zeman   @phonescooper

AT&T might have to pay Sprint millions of dollars if it is successful in acquiring Leap Wireless. Leap has an existing MVNO contract with Sprint in order to roam onto its CDMA and LTE networks. The agreement contains a clause specifying that any company that purchases Leap could terminate the MVNO agreement, but "would be required to pay to Sprint a specified percentage of the remaining aggregate minimum purchase commitment." The MVNO contract was forged in 2010 and was worth $300 million at the time. Based on the payment schedule, Leap has already paid Sprint about $175 million, leaving $125 million unpaid. Leap did not disclose the amount of the final minimum payment. AT&T proposed to buy Leap Wireless earlier this year for $1.2 billion. If the proposal meets regulatory approval, AT&T will eventually transition Leap's CDMA customers to its GSM/HSPA network and repurpose Leap's spectrum for its own LTE 4G network.

more info at Fierce Wireless »
more info at SEC »

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johnhr2

Nov 12, 2013, 12:46 PM

AT&T helping the competition?

Okay is it just me or is AT&T finding ways to help fund the competition?

Cause 1): AT&T had to pay T-Mobile cash and give them Spectrum for the break up fee of their failed merger.

Cause 2): Now AT&T has to pay Sprint Millions if AT&T gets approval to buy Leap.

I know Sprint would have got this money eventually but now Sprint gets it all at once.

To me AT&T is secretly helping the smaller competition, although even if that was true they would never publicly admit it.
Maybe so, but I doubt its from the goodness of their hearts. Oddly Sprint who was vocal over the TMO merger, has been dead quiet on this. Wonder if their new masters at Softbank shut them up for some reason we have no idea about. BTW $120 million (...
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Don't forget...at the end of the day AT&T is eliminating a competitor. Verizon and AT&T's ultimate endgame is two carriers. They'll settle for four...for now.
crood

Nov 12, 2013, 3:06 PM

Transitions Take Time

Couldn't AT&T simply use the expiration date of the contract as their drop dead date for transitioning Leap customers? No need to pay Sprint in one lump sum if you're going to need to keep the MVNO agreement in place for some time.
Sure they could, and I'm sure that has crossed thier minds, or already factored this into their costs. Roaming can be profitable, too bad Sprints has little spectrum and technology overlap with AT&T or it could have continued for both companies.
 
 
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