Nov. 1 (Bloomberg) -- MetroPCS Communications Inc., the largest pay-as-you-go mobile-phone service in the U.S., scrapped its offer to buy Leap Wireless International Inc. for more than $4 billion, saying it wasn't able to have ``meaningful'' talks.

MetroPCS ``believes strongly in its stand-alone prospects'' and will continue to expand into new markets, the Dallas-based company said today in a statement.

Leap rejected the all-stock offer in September, saying the price was too low. While Leap Chief Executive Officer Doug Hutcheson was unwilling to conduct negotiations publicly, he said that month that there was ``attractive potential'' in a combination.

``The announcement is clearly a disappointment for shareholders,'' said Stanford Group Co. analyst Michael Nelson, who advises investors to buy Leap and MetroPCS shares and doesn't own them. ``Both companies and shareholders of both stocks would clearly be better off if the two companies did combine.''

MetroPCS shares fell $2.36, or 10 percent, to $20.14 at 4:02 p.m. in New York Stock Exchange composite trading. San Diego- based Leap dropped $4.12, or 5.8 percent, to $67.19 on the Nasdaq Stock Market. The news halted trading in Leap's stock.

MetroPCS representatives didn't have an immediate comment. Leap said today it disagreed with MetroPCS's characterization of the recent discussions and again called the bid ``inadequate.'' Officials are open to talking about a combination if it is in shareholders' interests, Leap said in a statement.

Acquisition Benefits

Nelson said the acquisition would have saved the companies $3.8 billion and would have given Leap investors shares worth as much as $100 each. As an independent company, Leap is worth $81 and MetroPCS may reach $38, New York-based Nelson said.

The purchase would have nearly doubled MetroPCS's customers, which numbered 3.6 million at the end of September, and would have expanded its network to help it compete with larger rivals. MetroPCS had offered 2.75 of its shares for every share of Leap.

Both companies' shares had one-day price drops of more than 20 percent in August after they reported second-quarter subscriber additions that missed analysts' estimates. MetroPCS attracted 154,700 subscribers in the quarter, lower than the 250,000 Nelson predicted. Leap added 126,791, missing Jefferies & Co. analyst Romeo Reyes' 128,542 prediction.

MetroPCS said that combined, the two companies would have a larger service area and would lose fewer customers. The companies target people with poor credit who don't qualify for plans with larger companies, such as Verizon Communications Inc. or AT&T Inc.

MetroPCS, which has expansion plans in New York, Dallas, Las Vegas and Detroit, would complement Leap's network in smaller cities in New York, California, Nevada and Texas. Leap also has a presence in Tennessee, North Carolina, South Carolina, Georgia, Florida, Alabama, Louisiana and other states where MetroPCS covers less territory.

To contact the reporter on this story: Amy Thomson in New York at athomson6@bloomberg.net

Last Updated: November 1, 2007 17:26 EDT