AT&T to Close Aio Wireless Brand if Leap Wireless Purchase is Approved
USA based AT&T plans to close down its fairly recently launch prepay brand, Aio Wireless if its acquisition of smaller regional network, Leap Wireless is approved by the regulators.
Leap Wireless already has a low-cost prepay brand of its own, Cricket and Aio Wireless customers will be migrated to the Cricket service instead.
AT&T's foray into prepay has proven a difficult one with limited market reach and confusion as to why it wasn't simply offered under the existing and more widely recognised AT&T brand.
Conversely, Cricket is a well known prepay brand, and should be able to easily absorb the Aio Wireless service.
"Aio still needs to establish widespread retail distribution, build brand recognition and develop a significant customer base," Rick Moore, AT&T senior vice president of corporate development, wrote in a filing with the FCC.
AT&T has offered US$1.2 billion to buy Leap Wireless, plus debt of US$2.8 billion.
However, Leap Wireless is also sitting on federal and state net operating loss carryforwards (referred to as "NOLs") of approximately $2.7 billion and $2.1 billion, respectively, which could be used to reduce future federal and state income tax obligations.
In essence, including debt, AT&T is paying US$4 billion to buy a company that is sitting on tax credits worth US$4.8 billion that can be offset against future profits.
Leap currently operates -- under the Cricket brand -- a CDMA network, as well as a LTE network covering 21 million people in these areas, and has 3,400 employees.
It is expected that upon completion, that Cricket customers will be migrated to AT&T's own GSM/LTE based network infrastruture, and Leap's wireless spectrum used to expand its capacity.
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