Should You Leap Wireless International, Inc. (LEAP) Into Action With AT&T Inc. (T)?

The increased cash flow will help fund its relatively generous dividend of about $2 a share. And at a trailing P/E of only 8 the stock is not expensive.

Verizon, although its shares have outperformed the market by a big margin over the last five years, probably needs to pump up sagging growth to keep its top ranking in the wireless industry as measured by subscribers. Twice in the past six quarters it has reported negative earnings, and the overall trend is down — since 2008 EPS has declined about 80%. Keeping all the Verizon Wireless profits for itself may have been why it wanted to kick out Vodafone Group Plc (ADR) (NASDAQ:VOD).

Conclusion

The potential AT&T Inc. (NYSE:T)/Leap Wireless International, Inc. (NASDAQ:LEAP) deal is just the latest in a barrage of activity in the telecommunications industry. I also wouldn’t be surprised if Verizon and Vodafone eventually come to an agreement regarding its joint venture.

Whatever happens, investors should keep a sharp eye out for any opportunities (or fallout) from these transactions.

Mark Morelli owns shares of AT&T Inc. (NYSE:T); and Vodafone. The Motley Fool recommends Vodafone Group Plc (ADR) (NASDAQ:VOD).

The article Should You Leap Into Action With AT&T? originally appeared on Fool.com.

Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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