AT&T Inc. (T) Makes the Leap for More Spectrum

There’s likely to be little regulatory opposition to the deal, unlike when AT&T tried to buy T-Mobile. With that carrier looking more robust after MetroPCS and Softbank reinforced the competitive landscape, many of the arguments that might have been posited to prevent AT&T’s purchase have been diminished. Sure, the amount of spectrum continues to be consolidated into fewer hands, and with carriers such as MetroPCS and Leap disappearing from the market, independent low-cost alternatives are few and far between, so it’s a good part of the reason Cricket will be not only maintained but expanded: The regulators will be kept at bay.

While the need for spectrum provided the fuel for this deal, the $15 per share AT&T offered may be a rich price for what it’s gaining in return, beyond the 88% premium to Leap’s closing price on Friday. Leap’s spectrum is primarily in rural areas, and though it still holds substantial value, it’s not of the same order as, say, MetroPCS’s. Then again, as any real estate professional will tell you, to get the greatest gain you want to buy the worst house in the best neighborhood. That may be what AT&T has done with this deal.

The article AT&T Makes the Leap for More Spectrum originally appeared on Fool.com and is written by Rich Duprey.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Google.

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