Leap Wireless (LEAP) rose 4% late Tuesday after the prepaid local wireless service provider doubled its first-quarter profit and set plans to raise $250 million to bid on wireless licenses.
The San Diego-based company made $17.1 million, or 28 cents a share, for the quarter ended March 31, up from the year-ago $7.5 million, or 12 cents a share. Revenue rose to $267 million from $228 million a year earlier.
Analysts surveyed by Thomson Financial were looking for a 6-cent profit on sales of $246 million.
Leap also set plans for a $250 million forward sale of stock that the company said will allow it to raise funds to bid in Federal Communications Commission auction No. 66. The deal amounts to a bet that Leap shares will continue to rise in coming months, allowing it to get the money upfront and then issue fewer shares when the deal settles.
"Based on our evaluation, we believe that the spectrum available in this auction presents attractive prospects for expansion that provide good return potential for the business and, ultimately, our stockholders," said CEO Doug Hutcheson. "Therefore, we plan to participate in the auction, and may do so directly and with third parties, while continuing with the focused strategy and disciplined approach to acquisition we have demonstrated in the past."
Leap said it added 110,000 net customers and 278,000 gross customers in the latest quarter. The company ended the quarter with nearly 1,779,000 total customers and a customer churn rate of 3.3%.
Average revenue per user per month for the first quarter was $41.87, up from $39.03 a year ago. Cost per gross customer addition was $130 for the first quarter, up from $128 last year.
For the second quarter, Leap expects to add around 80,000 customers with churn of around 4%.