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Leap Mulls Muve Licensing

Fri, 02/17/2012 - 7:23am
Maisie Ramsay

Leap Wireless International may license its Muve Music service to prepaid providers overseas, President and CEO Doug Hutcheson said Thursday during a call with analysts.

"Foreign carriers with prepaid offerings have frankly taken great notice of the success of the Muve Music service here," Hutcheson said.

The company hasn't solidified its plans, but may make Muve "available more broadly as we move late into this year or next year."

"The Muve service as a licensed product, we've got a lot of interest from carriers around that," Hutcheson said.

Leap is the parent company of prepaid provider Cricket Communications. More than 500,000 Cricket customers have signed up for Muve Music since its debut in January 2011.

The unlimited music service has helped drive smartphones, which are more profitable than feature phones. About 60 percent of Cricket's new handset sales in the fourth quarter were comprised of smartphones and Muve Music devices, more than double the percentage from the previous year.

Hutcheson made his comments during the company's fourth-quarter earnings announcement, when the operator disappointed investors by posting churn at the high end of its previous forecast.

Churn came in at 3.9 percent amid steep competition in the prepaid space, at the top of Leap's prior estimate of between 3.7 and 3.9 percent.

Leap gained 179,000 net subscribers after the addition of 209,000 voice customers was offset by the loss of 30,000 broadband customers, slightly higher than its recent estimate of 175,000 net adds.

The declines in Leap's broadband business were expected, as the company has been working to phase out its broadband customers in favor of more lucrative smartphone subscribers.

Higher-rate service plans of smartphone users and Muve Music customers contributed to a 10 percent year-over-year increase in ARPU, which rose to $42.09.

Overall, sales rose 8 percent to $767.4 million, helping to shrink Leap's net loss to $84 million, from $249 million last year.

Leap said its LTE network is on schedule and will cover about two-thirds of its footprint over the next two to three years. Leap launched its first LTE market in Tucson in December and plans to cover about 25 million people with the service by the end of this year.

Construction of the network will comprise a large part of Leap's capital expenditures, which are expected to be between $600 million and $650 million this year.

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