Dec. 13 (Bloomberg) -- Leap Wireless International Inc., operator of the Cricket and Jump pay-as-you-go mobile-phone services, reported third-quarter sales that topped analysts' estimates after the company expanded its network.

Revenue rose 40 percent to $409.7 million, the San Diego- based company said today in a statement. Analysts in a Bloomberg survey had estimated an average of $402.1 million.

Leap is seeking to maintain growth as a tightening credit market threatens consumer spending. Leap plans to expand its network to cover an additional 5 million customers by the end of 2008. Chief Executive Officer Doug Hutcheson also announced efforts to sell calling plans for ``economically challenged'' subscribers, customers only willing to pay $40 a month or less.

``The question is whether the company is able to reinvigorate subscriber growth,'' said Michael Nelson, an analyst at Stanford Group Co. in New York. He advises investors to hold on to their shares and doesn't own any.

Leap rose $3.37, or 9.9 percent, to $37.51 in extended trading after the report. The shares, down 43 percent this year, fell $1.16 to $34.14 in regular Nasdaq Stock Market trading.

Expansion Costs

The company posted a third-quarter net loss of $43.3 million, or 64 cents a share, because of an accounting change and costs to build out its network. That compared with a loss of $801,000, or 1 cent, a year earlier.

Investors had anticipated slower growth after Leap said last month that it was attracting fewer customers than projected. The company expects to add 70,000 to 130,000 new users in the fourth quarter. When Leap gave that forecast in November, the shares fell the most in three years.

Service revenue rose 47 percent last quarter to $354.5 million from a year earlier. That topped the company's estimates from last month.

Leap's average monthly revenue per customer will reach $46 in the current period, from $44.51 in the third quarter, the company said.

Leap, which had delayed its full third-quarter release to correct accounting errors, added 36,484 new customers in the period. That missed a company forecast of 40,000. Leap added 161,000 users a year earlier.

Restatements

The correction of accounting errors, which go back to 2004, may cut service revenue and operating income by $20 million each. The errors aren't a result of employee misconduct, the company said.

Leap incorrectly counted extra months of sales from customers who had ended their service. It also booked some revenue and costs in the wrong periods.

The company ranks behind MetroPCS Communications Inc. in U.S. sales of pay-as-you-go wireless services. MetroPCS, which offered to buy Leap earlier this year, withdrew its bid last month.

MetroPCS said this month it won't hold further merger discussions until after it bids on wireless airwaves in a government auction that begins next month.

(Leap held a conference call today to discuss the results. To see a Web cast, go to http://www.leapwireless.com.)

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

Last Updated: December 13, 2007 20:03 EST