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Mar. 15, 2010

Leap Wireless said earlier this morning that it has cut about 4 percent of its workforce and closed or transferred 38 of its Cricket stores.

Leap spokesperson Greg Lund confirms that the flat-rate wireless service provider has let go Friday a total of 180 workers in the U.S. as part of a cost-cutting review.

The layoff decision was taken after Leap reported its fourth-quarter and 2009 financial results on Feb. 25.

For its 4th quarter, Leap reported a bigger-than-expected loss of $64 million, or 82 cents a share on revenue of just $547 million.

The wireless operator has been the subject of merger rumors since reports surfaced 7 weeks ago that the company has hired Goldman Sachs as a strategic adviser in a possible sale of the company.

Kansas City-based Sprint and Dallas-based MetroPCS are two companies most frequently mentioned as potential buyout candidates. MetroPCS made an unsolicited bid in 2007 for Leap, but a deal never materialized.

Whether Leap Wireless is taking these steps in preparations for a corporate merger is another matter, however. Lund added that the recent layoff was made as part of a two-prong financial review of the company's operations.

Lund says that his company has eliminated about ninety-two positions in its corporate structure, including 46 at its San Diego headquarters and 44 at its Denver operating facility.

Leap then cut another 89 jobs as part of its decision to close 28 Cricket storefronts and to convert 11 company-owned stores into independently owned and operated entities.

Leap has 4,192 employees and 241 company-owned stores that are remaining, Lund added.

On March 1st, the company announced that it was forming a joint venture with Pocket Communications of San Antonio, to provide pre-paid wireless services to customers of both companies in South Texas.

Under the specific terms of the deal, Leap holds a controlling interest in the joint venture, and Pocket’s 24-percent stake becomes available in August 2013.

Lund characterized the layoff as regrettable, but part of a routine assessment of Leap’s operations and how best to use its human and financial resources.

“One of the reasons we can offer the prices that we do is because we operate a very low-cost operation,” Lund was quick to point out.

If merger speculation were to progress further, any transaction would likely face tighter scrutiny by the FCC than years past.

Overall, the largest wireless carriers already have acquired many smaller ones – through deals approved by previous commissions – and the current composition of the FCC has signaled an aggressive stance in overseeing the competitiveness of the mobile service industry.

Leap's committee to assess strategic options includes Ronald Kramer, William Roper and former CEO of Nextel Partners John Chapple.

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Source: Leap Wireless Inc.