Zacks_Analysts' Blog : Leap Expands Service in New Markets - Analyst Blog

Leap Wireless International Inc. (LEAP), a small-sized prepaid wireless services provider in the U.S. operating under the brand name “Cricket”, unveiled its popular Muve Music service plan in new markets across the country.

The popular music service will be available in more than 15 states across the country.

Cricket customers can access a combined package of voice, data and text along with unlimited music download on the nationwide 3G network of Leap Wireless by paying just $55. Leap is the first wireless service provider in the U.S. to launch this innovative service.

This popular service plan was launched in the beginning of 2011 across few states in the U.S. But looking at the growing popularity of the service plan among music lovers, the company is expanding its service to many more states. Presently, the company is serving 26 (including the newly-added states) states across the country.

Leap Wireless has already tied up with popular music companies like Universal Music Group, Warner Music Group, Sony Music Entertainment and EMI Music in order to offer a variety of music to its subscribers.

We believe this product innovation is a desperate attempt by management to revive the company’s financial position. As the prepaid wireless market is getting more competitive, Leap is suffering as its larger peers such as Metro PCS Communications Inc. (PCS), Boost Mobile, a subsidiary of Sprint Nextel Corp. (S), and Tracfone, a subsidiary of America Movil SAB (AMX) continue to attract subscribers with their competitive service plans, greater network coverage and better product offerings.

Leap remains one of the low cost wireless service providers in the U.S, which enables it to roll out a range of cheap service plans starting from as low as $35 per month. The company has strategic plans to expand coverage in urban and suburban markets and avoid less populated areas to keep its infrastructural cost low. After establishing its network in a new market, the company will promote its services mostly through less expensive media.

We maintain our long-term Neutral recommendation on Leap Wireless International Inc. Currently, Leap Wireless International Inc. has a Zacks Rank # 3, implying a short-term Hold rating on the stock.