Stock of Leap Wireless Drops as Subscribers Defect

Wednesday, 20 Feb 2013 05:28 PM

 

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Shares of Leap Wireless International Inc., which sells the Cricket prepaid mobile-phone service, dropped the most in four months Wednesday after losing more subscribers than expected and cutting back its investment plans.

The carrier shed 337,000 customers in the fourth quarter, it said, worse than the 175,000 average estimate of three analysts surveyed by Bloomberg. Leap’s capital expenditures will drop as much as 37 percent to $275 million this year as it seeks partnerships to provide faster download speeds for smartphones rather than expanding its own network in some areas.

“While managing the company for cash flow can help the company in the short term, cutting growth cap ex is not a sustainable strategy,” said Jonathan Chaplin, an analyst at New Street Research in New York, said in a research note Wednesday. “Subscriber metrics deteriorated drastically.”

Leap is reining in its spending after its subscriber base dropped 11 percent last year to 5.3 million. The company said it lowered discounts on smartphones, resulting in higher average prices for high-end devices.

Leap, based in San Diego, slid 8.3 percent to $5.61 at the close in New York, the biggest decline since Oct. 3.

The fourth-quarter net loss narrowed to $74.3 million, or 96 cents a share, from $84.4 million, or $1.10, a year earlier. Sales slipped 1.5 percent to $756 million.

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