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AT&T To Aio: Take A Leap

Dallas – Leap shareholders will vote Thursday on AT&T’s proposed purchase of regional no-contract carrier Leap Wireless.

If the deal goes through AT&T will retire its fledgling Aio Wireless no-contract brand, AT&T said in FCC filings.

 “After the transaction’s close, AT&T intends to combine the nascent operations of Aio with Leap’s existing operations under the Cricket brand name,” AT&T said in an August 7 filing.

In an August 1 filing, AT&T said an acquisition of Leap would help it reach the prepaid market more quickly than it could by building the Aio brand.

 “Aio was conceived as a start-up, completely separate and apart from the AT&T brand and existing distribution channels,” the filing said. “Today, Aio still needs to establish widespread retail distribution, build brand recognition, and develop a significant customer base. Leap, in contrast, has an established prepaid Cricket brand that is well-known in its service area and that AT&T intends to retain and expand nationwide.”

Just as important, the filing said, “Leap has an established distribution network, a significant subscriber base of about 4.8 million customers (as of June 30, 2013) and experience in marketing and selling no-contract service, all of which can be leveraged to expedite AT&T’s establishment of a competitive nationwide presence more rapidly than AT&T’s new brand could achieve on its own.”

AT&T subsidiary Aio Wireless launched in May in select cities with no-contract cellular service targeting the value-conscious.

In July, AT&T announced plans to acquire ailing Leap for $1.2 billion to obtain Leap spectrum to accommodate future data growth and increase its share of the fast-growing prepaid market.

The Aio subsidiary has since expanded its store count to more than 240 in 14 markets and has begun to offer service to consumers nationwide via its web site.

Aio service is sold only through Aio-brand stores operated by third parties and through Aio’s website.

AT&T has said it expects regulatory approval of its Leap purchase in the first half of 2014. The carrier will keep Leap’s Cricket brand and migrate its subscribers to AT&T’s own network.