Leap Wireless sees net loss widen on customer defections

Struggling US mobile operator Leap Wireless has reported a widening of second-quarter losses owing to debt repayments and dwindling revenues as its customer base shrinks.

The operator – recently the target of a $1.2 billion takeover bid from AT&T (Dallas, TX, USA) that has yet to secure regulatory approval – saw its net loss grow to $156.4 million for the three months ending June 2013, from $46 million in the year-earlier quarter.

Revenues, meanwhile, shrank by 7% over the same period, to $731.5 million.

Struggling US mobile operator Leap Wireless has reported a widening of second-quarter losses owing to debt repayments and dwindling revenues as its customer base shrinks.

The operator – recently the target of a $1.2 billion takeover bid from AT&T (Dallas, TX, USA) that has yet to secure regulatory approval – saw its net loss grow to $156.4 million for the three months ending June 2013, from $46 million in the year-earlier quarter.

Revenues, meanwhile, shrank by 7% over the same period, to $731.5 million.

Net customer losses rose to more than 364,000 in the quarter, from about 289,000 in the second quarter of 2012, as the company struggled to compete against bigger rivals.

Leap (San Diego, CA, USA) said the losses reflected “intensified competition in our markets and increasing customer demand for 4G data services”.

New high-speed 4G networks have become the main battleground for US wireless operators, with the four leading players – Verizon Wireless (New York City, NY, USA), AT&T, Sprint (Overland Park, KS, USA) and T-Mobile (Bellevue, WA, USA) – racing to extend infrastructure across the country and build up their spectrum holdings so they can offer the fastest services to consumers.

Indeed, gaining access to Leap’s spectrum holdings is seen as a primary motivation of AT&T’s takeover bid.

Leap has been trying to reposition itself as provider of higher-value services, and boasted a substantial 7.8% increase in average revenue per user, to $44.89 a month, thanks to its sale of pricier phone plans.

But the move may have exacerbated the operator’s losses, forcing many of the lower-income subscribers who form its traditional base to look elsewhere for low-cost deals.

According to Dow Jones, Leap’s only quarterly profit since 2007 came in the third quarter of 2012 when it benefited from a spectrum sale.