Leap Wireless (LEAP) Worth More Intact Than in Pieces - Deutsche Bank

Following press reports and comments from management, speculation is swirling that Leap Wireless (NASDAQ: LEAP) is consider a sale. Analysts at Deutsche Bank examined the possibility and they made this conclusion- “LEAP's spectrum, while valuable, does not support the equity due to significant debt and other material long-term obligations. We therefore believe LEAP must improve operations (standalone, in partnership or through a sale) to unlock value.”

“We estimate that LEAP’s core assets are worth $4.6B including $2.6B for
spectrum, $1B for its customers and $1B of salvage value for its network assets,” said analyst Brett Feldman. “While this would be sufficient to pay down LEAP’s $2.7B of net debt, the carrier also has $1.8B of operating and capital lease obligations, $900M of iPhone purchase commitments, $280M owed to Sprint under its wholesale contract and nearly $800M of additional purchase obligations. We therefore do not view the value of LEAP’s core assets, most notably its spectrum, as providing a valuation floor for the stock.”

The bottom line is that Feldman thinks improving fundamentals, alone or in a partnership, is the key to unlocking shareholder value.

Analysts at Deutsche Bank have a Hold rating on Leap Wireless (NASDAQ: LEAP) with a price target of $4.00.

For an analyst ratings summary and ratings history on Leap Wireless click here. For more ratings news on Leap Wireless click here.

Shares of Leap Wireless closed at $5.45 yesterday.

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