Sept. 16 (Bloomberg) -- Leap Wireless International Inc., the provider of Cricket and Jump mobile-phone service, rejected a $4.7 billion takeover offer from larger rival MetroPCS Communications Inc., calling the price too low.

The bid, equal to about $69.03 a share, doesn't reflect the company's value because it's a 14.4 percent discount to Leap's 60-day average trading price prior to the date of the offer, Leap said today in a statement. MetroPCS, the biggest pay-as- you-go wireless carrier in the U.S., offered 2.75 shares for every Leap share on Sept. 4.

If the companies intend to bid for airwaves in a U.S. government auction in January, they'll have to merge before year-end, and MetroPCS may have to offer as many as 3.3 shares to be successful, J.P. Morgan Securities Inc. analyst Thomas Lee said. Regulations typically bar companies from sharing some data 45 to 60 days before an auction to prevent collusion.

Share of San Diego-based Leap, which are trading higher than the offer price, fell 18 cents to $74.32 on Sept. 14 in Nasdaq Stock Market trading. MetroPCS shares rose 31 cents to $25.10 in New York Stock Exchange composite trading.

Markets Similar

MetroPCS has said the transaction would unite the two fastest growing wireless carriers in the U.S. Leap spent almost $1 billion on airwaves last year. The Congressional Budget Office estimates January's auction may raise as much as $15 billion. Television broadcasters will free up the airwaves when they convert to digital signals in 2009.

``The contacts we have had with a number of Leap's shareholders indicate that they want to see a combination of our two companies happen without unnecessary delay,'' Roger D. Linquist, MetroPCS's chairman and chief executive officer, said in a statement. ``It appears that Leap's board is ignoring the will of its shareholder base.''

MetroPCS's offer is about 13.1 times Leap's earnings before taxes, depreciation and amortization, J.P. Morgan's Lee said in a report the day after the bid. That values Leap at a discount to MetroPCS, which is trading at 15.3 times earnings. The New York-based analyst rates MetroPCS ``neutral'' and Leap ``overweight.''

Both companies target customers whose credit scores are too poor to qualify them for long-term contracts with carriers such as AT&T Inc. MetroPCS said at the time of the offer that the combined company would have licenses in almost all the top 200 markets in the U.S.

MetroPCS said in May that it will start offering service in cities such as New York and Dallas. Leap operates in parts of New York state and Texas cities including Austin and El Paso. Leap also owns airwaves in southern states such as Alabama, North Carolina and Georgia, where MetroPCS's networks don't cover as much territory.

Leap has increased subscribers by 24 percent since 2004 to 2.67 million. MetroPCS's customer numbers have risen 45 percent over the same period to more than 3.5 million.

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

Last Updated: September 16, 2007 21:10 EDT