Traders Eye Leap Wireless (LEAP) Ahead of Pre-Paid iPhone Launch

June 19, 2012 11:14 AM EDT Send to a Friend
Traders have got their eye on Leap Wireless (Nasdaq: LEAP) ahead of the launch of a pre-paid version of Apple's (Nasdaq: AAPL) iPhone on Friday, June 22.

Leap will be first-to-market with a pre-paid version of the popular phone. The company will offer iPhone 4S and iPhone 4 with its $55 per-month, all-inclusive unlimited talk, text and data plan.

The big question is: Will customers pay up for a minimally-subsidized iPhone?
Leap will be charging $499.99 for the iPhone 4S 16GB. With an ASP of ~$650 for the iPhone, this suggests Leap will be eating about $150 per phone.

AT&T for one doesn't think customers want to pay up for a unsubsidized iPhone. "We have done a lot of research on this and we have not seen our customers say to us, 'We welcome paying $500-$600 for a phone," AT&T Mobility President Ralph de la Vega was quoted as saying recently. Leap hopes to change this.

AT&T's price point for eligible upgrades and new customers of the iPhone is $199.

Analysts at Canaccord Genuity said it is impossible to handicap the risk/reward from the addition of the iPhone, but it is an important test. "We believe investors will soon see if US consumers are willing to pay the point-of-sale premium (100%) to achieve the recurring expense savings versus the larger carriers."

The iPhone 4S and iPhone 4 will be available in Cricket company-owned stores and select dealers in nearly 60 markets.

Shares of Leap are up 1.7 percent today to $5.50.


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