T-Mobile US Inc, the No. 4 U.S. mobile service provider, said on Thursday that its MetroPCS prepaid wireless business has doubled the number of markets where it operates, putting it head-to-head against smaller rival Leap Wireless in many of its new markets.
Both Leap (San Diego, CA, USA), which agreed to be bought by No 2 U.S. mobile service provider AT&T Inc (Dallas, TX, USA), and MetroPCS (Richardson, TX, USA), which merged with T-Mobile (Bellevue, WA, USA) less than three months ago, target cost-conscious customers who pay for calls in advance.
While small regional operators Leap and MetroPCS previously only overlapped in a handful of markets, MetroPCS can now use T-Mobile's national network to expand its brand into more places where it could not previously compete with Leap.
MetroPCS Chief Operating Officer Tom Keys said the company's new markets include 13 metropolitan areas where it will compete with Leap. MetroPCS said it is expanding coverage to a potential customer base of 150 million people from 100 million.
T-Mobile US already competes aggressively with AT&T for postpaid customers who pay monthly bills but it is amping up the competition ahead of the Leap deal, which AT&T announced on July 12 and hopes to close in six to nine months.
"We plan to arrive months in advance of AT&T and go right into the places where those Leap customers are who are hungry for something new and offer them something superior," T-Mobile Chief Marketing Officer Mike Sievert said.
While some analysts had speculated that T-Mobile could make a counter bid for Leap, Sievert told Reuters on July 16 that he hoped instead to acquire Leap customers by competing for them "the old fashioned way.
AT&T, which has said it would keep Leap's Cricket brand after the deal, declined to comment on the story. Leap said it "will continue to compete vigorously" against all its rivals.
In markets where T-Mobile US and MetroPCS services are both available, the companies will operate separate stores because they expect to attract different types of customers.
This will involve adding 1,000 MetroPCS stores in new markets by the end of this year, according to the company.
Keys said he would gradually expand the MetroPCS brand into more new markets but declined to give details.
The company is planning to eventually shut down the MetroPCS network and move its remaining customers onto the T-Mobile network. It expects to complete this process sometime in 2015.
T-Mobile U.S. shares closed up 20 cents, or 0.8 percent, at $24.41 on the New York Stock Exchange. Leap shares finished unchanged at $17.12 on Nasdaq. AT&T closed up 6 cents at $35.46 also on NYSE.
(Reporting by Sinead Carew; Editing by Bernard Orr, Chizu Nomiyama and Richard Chang)