Late last year, telecom giant AT&T (NYSE:T) said it would acquire Leap Wireless (NASDAQ:LEAP) for $1.2 billion in cash. This comes years after AT&T's infamous failed attempt to buy T-Mobile (NASDAQ:TMUS). The deal between AT&T and Leap is expected to close by the end of this month. However, it now looks as though T-Mobile is eating Leap's lunch, with Leap having lost 745k customers last year. Leap also posted about $1.1 billion in net losses over the past three years.
So why in the world would AT&T want to continue with this deal? In this segment from Friday's Tech Teardown, host Erin Kennedy and Motley Fool tech analyst Evan Niu take a look at the merger and how it couldn't have come at a better time for Leap shareholders. Evan also notes that for AT&T, the deal was never about buying Leap's customers, but about gaining more spectrum, and holding a stronger prepaid brand name in Cricket. AT&T's massive footprint should also solve Cricket users' biggest complaint, that the service doesn't have adequate coverage.
Telecom investors: So who really wins the smartphone war?
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Erin Kennedy has no position in any stocks mentioned. Evan Niu, CFA has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.