Updated from 9:22 a.m. ET with Paulson & Co. comment and opening share prices.
NEW YORK ( TheStreet) -- There are many companies left for telecom giants to fight over amid a frenzy of merger and acquisition battles as carriers look to scale their wireless networks and improve smartphone wireless service.
On Friday, AT&T (T - Get Report) said it is buying Leap Wireless (LEAP - Get Report) for $15 a share, in a deal that could add millions of pre-paid customers to the telecom giant and bolster its wireless service capacity.
"Perfect fit for AT&T. They get valuable spectrum and 5 million customers," Paulson & Co, a top Leap shareholder, said in an e-mailed statement. "Good outcome for Leap shareholders," the $18 billion hedge fund added.Paulson & Co. holds nearly 10% of Leap's outstanding shares, according to Securities and Exchange Commission filings, after taking a large position in the first half of 2012. Other large investors include Magnetar, Blackstone (BX) and Owl Creek Management. Leap Wireless's largest shareholder MHR Fund Management is supporting the company's acquisition by AT&T, however, analysts and investors are speculating there could be a bidding war. In a Friday press release, Leap Wireless said 29.8% of its outstanding shares have entered into an agreement to vote in favor of the transaction. Gregory Lund, a Leap Wireless spokesperson, confirmed those votes only relate to MHR's stake. While the merger is just the latest in a frenetic two years of consolidation in the industry, initiated by AT&T, there are likely more deals yet to come. Meanwhile some telecom industry analysts believe AT&T faces the prospect of a bidding war for Leap Wireless given the value of the company's spectrum assets to carriers such as Verizon Wireless (VZ - Get Report), T-Mobile USA (TMUS - Get Report) and Dish Network (DISH - Get Report). Verizon could make a counter-bid to AT&T's deal, given forecasts the company could fall behind its primary competitor in wireless spectrum per million subscribers, according to Citigroup analyst Michael Rollins. According to Rollins, AT&T will have spectrum of 1.1 megahertz (MHz) per million subscribers and 1.7 million MHz per million post-paid subscribers, ahead of Verizon Wireless. Burgeoning players in the U.S. wireless market could also take a look at trying to eclipse AT&T. Charlie Ergen-chaired Dish Network could look at Leap Wireless's pre-paid customer network as the asset the satellite TV giant needs to finally enter the wireless market, according to Rollins. T-Mobile may have been involved in a private bidding war with AT&T for Leap Wireless, according to Oppenheimer analyst Timothy Horan. "
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts