Having seen its previous LTE roaming partner stumble over spectrum concerns, Leap Wireless today announced a five-year wholesale deal with Clearwire. The agreement will provide Leap and its Cricket brand with LTE coverage for customers when they are outside of the company’s native markets.
Financial terms of the deal were not released. Macquarie Equities Research noted that the deal could provide Clearwire with a “few hundred million dollars per year in incremental [earnings before interest, taxes, depreciation and amortization.”
Clearwire’s (CLWR) stock was up more than 4% in early Wednesday trading, while Leap’s (LEAP) stock was trading down just over 1%.
Leap currently provides LTE services using its 1.7/2.1 GHz spectrum in Tucson, Ariz., with plans to expand the technology to cover 25 million potential customers by the end of this year and across two-thirds of its current CDMA network footprint over the next three years. The carrier last year announced an LTE roaming agreement with LightSquared, which appears to have fallen apart as LightSquared has been unable to gain access to its spectrum assets.
Leap currently relies on Sprint Nextel for a 3G roaming agreement that allows the carrier to offer both roaming services to customers that stray outside of its home markets as well as to offer 3G services in markets where it does not control its own network.
A number of other regional carriers have announced roaming deals with LightSquared over the past year, deals that now appear to be up in the air. FreedomPop, the wireless broadband startup backed by Skype co-founder Niklas Zennstrom, announced earlier this year that it will buy wholesale broadband service from Clearwire instead of from LightSquared.
Clearwire announced late last year plans to overlay its current WiMAX network with LTE equipment. Clearwire has touted its deep spectrum portfolio, which in some markets reaches 160 megahertz of spectrum, as a significant advantage in providing high network speeds and ample capacity for data-heavy services.
Clearwire continues to lean heavily on majority investor Sprint Nextel for its current wholesale traffic, but has also managed to pick up a handful of network partners. With LightSquared apparently out of the wholesale game at least for the near term, it’s expected Clearwire could see its appeal increase.
Clearwire’s management noted in a statement that it will continue seeking additional wholesale partners.
“We have always believed that our unmatched spectrum portfolio offers a compelling resource that can and will enable wireless operators to thrive in the 4G marketplace of the future,” said Clearwire CEO and President Erik Prusch in a statement. “We are very pleased to provide Cricket with additional mobile broadband resources to supplement their own LTE build and we plan to continue to actively seek new opportunities to serve the needs of other 4G providers.”
With Leap on board, analysts predict that rival MetroPCS could be the next to forge a partnership with Clearwire. MetroPCS has reportedly been active in trying to secure spectrum resources for its LTE network or even a potential buyout.
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