Breaking News

U.S. Defense Secretary Hagel to Resign, White House Official Says
Tweet TWEET

Leap Wireless Drops as Subscriber Defections Force Cutbacks

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

The carrier shed 337,000 customers in the fourth quarter, it said today, 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 today. “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.

To contact the reporter on this story: Crayton Harrison in New York at tharrison5@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.