SAN DIEGO-Leap Wireless International Inc. reported plans to exit one of its Midwest markets in favor of expanding its Northwest footprint.
The company, which offers its Cricket flat-rate calling service in 37 markets, said it signed an agreement to enter a joint venture with CSM Wireless L.L.C. and WLPCS Management L.L.C. to offer service in Portland, Ore., that is adjacent to Leap’s current operations in Salem and Eugene, Ore. In connection with the deal, Leap said it has agreed to sell its Toledo and Sandusky, Ohio operations to Cleveland Unlimited Inc., which offers a similar flat-rate service under the Revol brand in Cleveland.
For the Oregon joint venture, dubbed LCW Wireless L.L.C., Leap said it would contribute approximately $65 million in investments, including its existing Salem and Eugene operations, and control 73 percent of the venture. CSM Wireless will contribute its 10-megahertz C-block license and control 27 percent of the partnership.
Leap’s management said it expects the Portland operations to add 1.9 million covered potential customers to the 522,000 covered pops in Salem and Eugene.
Under the Ohio agreement, Leap said it will sell its 15-megahertz spectrum licenses covering more than 1.5 million pops in Toledo and Sandusky and network assets to Revol and network partner CSM. Leap said it will continue to serve its Cricket customers in the Ohio markets until the transaction is completed.
Leap noted the deal was contingent on Revol gaining waiver approval for financing prior to Dec. 15. If the financing waiver is not granted, the transaction will be converted into a transfer of Leap’s Toledo and Sandusky assets to Revol and CSM for $12.4 million in cash proceeds and the transfer of CSM’s Portland spectrum licenses to the LCW joint venture. If the transfer occurs, Leap will control 75 percent of the LCW joint venture and WLPCS will control the remaining 25 percent, with Leap funding the network build out through a $75.6 million senior secured credit facility between Leap and LCW.
