Barclays on U.S. Telecom Services: LEAP and PCS: Underlying Business Improving, Gas Prices Remain a Concern

Barclays on U.S. Telecom Services: LEAP and PCS: Underlying Business Improving, Competition Stable, Gas Prices Remain a Concern

Barclays analyst said, "The underlying business of Leap Wireless (Nasdaq: LEAP) and MetroPCS (NYSE: PCS) continues to improve, due to a relatively stable competitive environment and the migration toward smartphones, which are boosting ARPU across the wireless industry. While we remain skeptical that LEAP and PCS (with a prepaid model) will be able to materially impact the postpaid market, the proposed acquisition of T-Mobile by AT&T should reduce competition at the lower end of the smartphone market. Higher gas prices are a concern for both players, as the typical household in their target demographics has seen their monthly gas spend rise by $40-60/month since the start of 2011."

"LEAP and PCS Should Both Benefit from AT&T/T-Mobile. We believe both LEAP and PCS would benefit from an AT&T/T-Mobile (NYSE: T) combination, both as it would remove the postpaid player with the most aggressive pricing model, and because both LEAP and PCS would be well positioned, in our view, to benefit from any divestitures of spectrum or subscribers mandated by DOJ to complete the transaction."

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Barclays Downgrades Renault SA (RNO:FP) (RNSDF) to Equalweight
• Emkay Global Starts Pearl Global Industries (PGIL:IN) at Buy (1)
• JPMorgan Downgrades Kuaishou Technology (1024:HK) to Neutral