Leap CFO: Market can support multiple prepaid brands

Cricket’s first quarter results, which were announced late last week. The company’s stock tumbled 15 percent upon the news, mostly because, it appears, rival MetroPCS did a bit better, especially in improving its churn rate. This surprised many within the company, CFO Walter Berger included. He recently spoke to The Wall Street Journal (subscription required) regarding the company’s future. He seems pretty optimistic, despite the market turns of the past few days. The most interesting part of the talk centers on Cricket’s place in the prepaid market. Many carriers, Cricket included, have made changes to their plans and coverage during the past few months. This might signal that the competition is stiff and that some might be forced out. Berger doesn’t think so, though. He believes that there’s plenty of room for prepaid competition, and that this trend will likely hurt carriers dependent on contract services.

While many see the expanded number of prepaid options as a risk to Leap, Berger said he believes the market is large enough to support these players. Instead, these options pose a larger threat to the established providers who offer contract, or postpaid, service plans. “I look at it as very compelling in terms of taking share from postpaid,” he said. That’s because companies such as Leap have the benefit of lower operating costs, and can flexibly change their offerings, Berger said. The larger companies have higher costs and can’t be as nimble, he added.

Of course, the article ended with speculation of a Metro-Cricket merger, a specter that won’t go away even as both companies make improvements to their services and offerings. As we’ve noted before, it seems like both companies are content to let 2010 play out before they consider reengaging each other. ]]>