Leap Wireless International Reports Results For First Quarter of Fiscal 2000

Cambridge Telcom Report, Jan 10, 2000

Wireless communications carrier Leap Wireless International, Inc. Wednesday announced its subscriber growth through the end of calendar 1999 and its subscriber and financial results for the first quarter of fiscal year 2000 ended November 30, 1999.

By the end of the calendar year, international and domestic subscribers at Leap's subsidiaries and joint ventures grew to more than 210,000 - over 22,000 in the United States, 78,000 in Chile, and 110,000 in Mexico. This represents a 250 percent increase since August 31, 1999, Leap's 1999 fiscal year end. Leap's proportionate share of the total subscriber base grew to 111,000 at calendar year-end based on Leap's 100 percent ownership of SMARTCOM PCS, 28.6 percent ownership of PEGASO, and its current 7.2 percent stake in Chase Telecommunications Holdings, Inc. (ChaseTel). In late September 1999, Leap filed an application with the FCC to approve the transfer of ChaseTel's licenses to Leap in conjunction with Leap's planned acquisition of ChaseTel. At the end of Leap's first fiscal quarter ended November 30, 1999, international and domestic subscribers were 104,200 with Leap's proportionate share of these subscribers being approximately 70,200.

"We saw subscriber growth of nearly 74 percent during the first fiscal quarter even though our Chilean operation did not re-launch as SMARTCOM PCS until late in November and PEGASO's launch of Mexico City did not occur until December," said Harvey P. White, chairman and chief executive officer of Leap. "We are especially pleased with the performance of our operations in December. The last month of 1999 proved to be ChaseTel's greatest thus far in terms of subscriber growth. PEGASO and SMARTCOM PCS saw large increases as well. These results reaffirm Leap's commitment to make wireless service easy to buy, easy to use and easy to pay for."

Domestically, Leap's operating company, ChaseTel, added 3,500 subscribers to its Chattanooga network during Leap's first fiscal quarter, closing the quarter with approximately 15,900 total subscribers and bringing ChaseTel's total penetration of the covered population in the Chattanooga market to 5.0 percent. Growth over the Christmas holiday period continued to be strong, with ChaseTel adding more than 6,100 subscribers in the month of December, bringing its total subscribers to over 22,000 and increasing its penetration to 7.0 percent in less than ten months of operation. Leap's domestic service concept, Cricket, was launched in Chattanooga, Tenn., in March 1999, using ChaseTel's infrastructure under an agreement that provides that ChaseTel controls the business until Leap's proposed acquisition of ChaseTel is complete. Construction of a wireless network in Nashville is underway and is expected to launch by early 2000.

Internationally, subscriber growth was strong in Leap's Mexican joint venture, with PEGASO adding 21,500 customers during Leap's first fiscal quarter and bringing the total number of subscribers on its network to 27,000 at the end of November. By calendar year end, PEGASO's subscribers rose to 110,000 after the launch of Mexico City in early December. Leap's Chilean operation also made significant progress, as total subscribers grew by 19,300 subscribers to 61,300 in the first fiscal quarter. Holiday sales added another 16,700 subscribers, bringing SMARTCOM PCS' total subscriber base to 78,000 by calendar year end.

Significant Events

In September, Leap announced that it had agreed to purchase over $660 million in infrastructure equipment and services from Lucent Technologies and Ericsson in two separate vendor agreements. Both Lucent and Ericsson have agreed to finance the sale of equipment and related services that Leap intends to use to develop its wireless networks in various markets across the United States. These agreements are part of Leap's strategy to work with multiple world-class vendors. The commitment of funds by Ericsson is subject to the development of the next generation equipment, the negotiation of definitive documentation and the approval of Ericsson's board of directors.

In December, Leap announced that it had signed non-binding memoranda of understanding to purchase PCS operating licenses in Denver, Colo., Pittsburgh, Pa., and Macon, Columbus and Albany, Ga. If executed and approved, the agreements contemplated by these memoranda will give Leap licenses serving approximately 6.3 million potential subscribers (1998 POPs) and bring the total number of licensed POPs which the Company has acquired or agreed to acquire for use by its domestic subsidiary, Cricket Communications, Inc., to approximately 30.5 million. Leap currently has licenses or rights to acquire licenses to offer Cricket service to approximately 24 million POPs.

"By making wireless service simple, affordable and worry-free, Cricket's goal is to bring wireless service to people who have never used a mobile phone before as well as those who value the freedom of mobility in their local service area," said Susan G. Swenson president and chief operating officer of Leap and president and chief executive officer of Cricket Communications, Inc. "With financing from world-class infrastructure vendors and the pending addition of new markets, Cricket intends to roll out its flat-rate service to consumers in selected cities across the country."