AT&T just got itself into the music subscription business. The company announced Friday it has purchased Leap Wireless, owner of Cricket Wireless, for $1.19 billion in cash. Including debt, the deal is worth about $4 billion.
Leap Wireless developed the Muve Music subscription service for its Cricket Wireless pay-as-you-go mobile carrier. Packaged free of charge with mobile plans, Muve Music is one of the -- if not the most -- popular music subscription service in the country. The most recent subscriber number was 1.6 million in January. Muve Music also licenses its technology to Brazilian mobile operator TIM.
The deal creates a new dynamic in the U.S. subscription market by pairing a major mobile carrier with the owner of a major subscription service. Mobile carriers are important partners for music services seeking to bundle access to music with mobile phone plans. Whether or not the deal will preclude AT&T from partnering with other services -- such as the upcoming subscription service from Beats Music known as Daisy -- is unknown.
A Cricket spokesperson had not returned a request for comment at press time.
AT&T will retain the Cricket brand name and provide Cricket customers with access to AT&T's 4G LTE mobile network. AT&T also plans to develop Cricket in new markets.
Leap Wireless shareholders will receive $15 per share. Shares of Leap Wireless closed at $7.98 on Friday. Shareholders will also receive "one non-transferable contingent value right" related to the sale of wireless spectrum in Chicago owned by Leap.
The mobile market has been busy with deals and attempted deals recently. AT&T was unable to acquire T-Mobile in 2011 after facing opposition from federal regulators. T-Mobile's parent company, Deutsche Telekom of Germany, acquired MetroPCS earlier this year. MetroPCS, a pay-as-you-go carrier similar to Cricket, has a partnership with music subscription service Rhapsody. Earlier this month, Japanese company Softbank completed its acquisition of 78% of Sprint Nextel and Sprint completed its acquisition of mobile carrier Clearwire.