NEW YORK (AP) - Leap Wireless International Inc., the parent of the Cricket cellphone service, on Thursday said it will be the first mainland U.S. phone company to sell recent iPhone models on a prepaid, no-contract basis.
Starting June 22, Leap will sell the iPhone 4S starting at $500 and the iPhone 4 starting at $400. Service will cost $55 per month for unlimited calls, texting and data.
Leap Wireless International Inc., which is based in San Diego, focuses on selling no-contract service to low- income households. Its own network is limited to certain cities. In other places, it uses Sprint Nextel Corp.'s network.
The iPhone is compatible with only part of Leap's network, and the company is limiting sales to those areas, which include Houston and Austin, Texas; Portland, Ore.; Pittsburgh; Denver; and Salt Lake City.
Leap said the arrangement will be available in areas covering about 70 percent of its 6.2 million subscribers. Leap is the sixth-largest cellphone company in the U.S., as measured by number of subscribers.
Open Mobile, which serves Puerto Rico, became the first U.S. company to start selling the iPhone 4 and 4s on a no- contract, prepaid basis on May 18.
When the original iPhone launched in 2007, buyers could chose to set it up directly on an AT&T prepaid plan, But that option disappeared with later models. It has been possible to use imported or hacked "unlocked" phones on prepaid plans as well.
Leap's "unlimited" data service for the phone slows down once a customer user has racked up 2.3 gigabytes of usage since the start of a monthly billing cycle. That's a slightly lower limit than either Verizon or AT&T imposes under their "unlimited" plans.
Apple sells the iPhone at an average wholesale price of $647. The bigger phone companies then subsidize it by hundreds of dollars to sell it for $99 or $199. They count on making their money back in service fees over the life of a two-year contract. Since Leap sells the phone without a contract, it's subsidizing the phone less.
Larger carriers also sell the iPhone without a contract plan. But those phones cost more than iPhones bought through plans, and service costs the same as for phones used on a contract plan. Leap's plan is cheaper than what most iPhone customers pay.
Since the iPhone is so expensive, it's not a given that it's a good deal for a phone company to sell it. In a presentation to investors, Leap said it has committed $900 million over three years to buying iPhones. That's just 10 percent of its projected spending on phones, it said, and it doesn't expect iPhone sales to affect its operating income this year.
"We wouldn't be doing it if we didn't think it was a money maker," said Leap CEO Doug Hutcheson, in an interview. But because of the high price of the phone, he doesn't expect that more than 10 percent of the company's customers will buy it.
"This is an important addition to our portfolio, but it isn't going to become our business," Hutcheson said.
Leap sells smartphones running Google Inc.'s Android software for $100, and sometimes even less.
Investors initially cheered the news, sending Leap shares up in premarket trading, but the stock closed unchanged at $5.77.
The iPhone is hugely popular, but its price has kept it out of reach of many people who want it, across the world. When asked whether they could produce a cheaper model to satisfy demand, Apple executives have said that their first priority is making a good phone.
Missing from Leap's iPhone lineup is the 3GS, an older model that's still sold by AT&T. It's cheaper than the newer models, but doesn't work with Leap's or Sprint's networks.
Verizon Wireless, AT&T Inc. and Sprint, the three biggest cellphone companies in the U.S., already sell the iPhone, as do a half-dozen smaller, regional phone companies. The biggest companies that don't carry it are T-Mobile USA and MetroPCS Communications Inc. U.S. Cellular Corp., another regional carrier, said it turned down the chance to sell the phone because of its cost.
(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
KPN Said to Weigh German Wireless Merger With Telefonica - Bloomberg
Royal KPN NV (KPN) and Telefonica SA (TEF) are considering ways to merge their German units, a move that would create the country’s top mobile-phone operator by customers.
The companies are evaluating a variety of options, including a combination of Telefonica’s O2 Germany unit and KPN’s E-Plus, the two smaller of the nation’s four operators, said two people with knowledge of the matter, declining to be identified as the discussions are private. The companies are considering selling a stake in a German entity as part of an initial public offering, one of the people said.
A merger could help KPN, which said today it had begun a strategy review of E-Plus, to fend off an unsolicited 2.6 billion-euro ($3.2 billion) offer for a stake by Carlos Slim’s America Movil SAB. (AMXL) Telefonica this week received approval from its board to hold an initial share sale for O2 Germany as the Madrid-based company speeds up attempts to cut its net debt of more than 57 billion euros.
“The combination would create significant synergies,” said Henri Alexaline, a fixed-income investor who helps manage $1 billion at London-based FM Capital Partners Ltd. “The key hurdle would be how to remedy antitrust concerns but looking at Vodafone’s current reach it does not look like a deal breaker.”
Synergies
O2 Germany and E-Plus would have a combined mobile-phone client base of 41.7 million in the country, based on information from the company’s websites. That compares with Vodafone Group Plc (VOD)’s 36.5 million local mobile customers and Deutsche Telekom AG (DTE)’s 35.1 million wireless clients in Germany.
KPN acting Chief Financial Officer Eric Hageman said today that consolidation in the German market could generate 4 billion euros in synergies. Chief Executive Officer Eelco Blok said as recently as in November that Telefonica was “not willing” to sell. He declined to comment today on whether KPN is in talks with Telefonica.
“A combination of businesses of some kind would make a lot of sense,” said Francisco Salvador, a Madrid-based strategist at FGA/MG Valores. “It would boost the operators’ market share and would allow them to obtain significant synergies while ruling out any potential problems with licenses to offer services in the country.”
Telefonica, whose stock is down 33 percent this year, last week had it debt rating cut by Standard & Poor’s as the Spanish banking crisis accelerated the company’s loss of phone customers to discounters.
Debt Rating
KPN rose 0.1 percent to 7.65 euros in Amsterdam after earlier surging as much as 2.1 percent. Telefonica rose 0.8 percent to 9 euros in Madrid. The Spanish operator has a market value of 41.4 billion euros, compared with 110 billion euros in 2007.
A spokesman for Telefonica declined to comment on whether the companies are considering combining their German businesses.
America Movil this week began a 2.6 billion-euro offer to increase its stake in The Hague, Netherlands-based KPN. Telefonica’s finance chief, Angel Vila, told an investor conference in London yesterday that Telefonica has no plan to make a counter bid for KPN, according to two people who attended the meeting, who asked not to be identified because the meeting is private.
Telefonica CEO Cesar Alierta, with his company’s net debt greater than its market value, is turning to some of Telefonica’s most valuable assets for cash.
Slim’s Offer
Alierta bought mobile-phone operator O2 Plc for $31.5 billion in 2006 to add wireless units in the U.K., Ireland and Germany in his biggest acquisition. Germany is now Telefonica’s second-largest market in Europe and may be valued at as much as 9 billion euros, according to Citigroup Inc. (C)
KPN had 23 million mobile customers in Germany at the end of the first quarter. Frank Claassen, an analyst at Rabobank International, estimates E-Plus is worth about 8.5 billion euros, though with cost savings through a merger, that could rise to 10 billion euros.
Telefonica said this week it will explore share sales for O2 Germany and its Latin American businesses. The prospect of owning a minority stake in the No. 3 of four mobile operators in Germany, a market with more handsets than people, has left investors unconvinced.
Boris Boehm, who helps manage 1.1 billion euros including Telefonica shares at Aramea Asset Management in Hamburg, says the IPO plans aren’t helped by the fact that the operator’s need for cash is too obvious.
Poker Game
“If everyone knows that Telefonica needs money out of the IPO, I would say it’s not a wise idea,” he said, adding that he wouldn’t be interested in buying O2 Germany’s stock. “It’s like in a poker game, if everyone knows what your cards are, it’s not a good game to play.”
German mobile-phone subscriptions rose 4.8 percent in 2011, compared with growth of 5.6 percent in all of Europe, according to data compiled by Bloomberg Industries. Wireless penetration reached 139 percent in 2011 compared with 130.3 percent for the region.
Heinrich Ey, a fund manager at Allianz Global Investors in Frankfurt, which manages about 300 billion euros including Telefonica and Deutsche Telekom shares, said the Spanish company had to “rush and react” after S&P’s cut and Slim’s KPN bid.
“The big question down the road is on consolidation,” he said.
To contact the reporters on this story: Jacqueline Simmons at jackiem@bloomberg.net Manuel Baigorri in Madrid at mbaigorri@bloomberg.net
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
KPN, Telefonica Said to Weigh German Merger as Slim Prowls
Jock Fistick/Bloomberg
A selection of smartphones sit on display inside a Royal KPN NV store.
A selection of smartphones sit on display inside a Royal KPN NV store. Photographer: Jock Fistick/Bloomberg
Vodafone pays its chief executive an eye-watering £14m for hitting targets - The Independent
9,000 O2 customers face porn company money shot - Crave
If you've been a naughty boy, something's about to fill your slot that'll leave you moaning. A letter, that is, from porn-peddler Ben Dover, demanding compensation if you're suspected of pirating adult movies.
British adult entertainment company Ben Dover Productions, also known as Golden Eye International, is tossing off letters to the users of 9,124 IP addresses on O2, accusing them of illegally downloading blue movies and begging to be satisfied.
The porn company won a court order in March that forced O2 to shoot over the details of customers who may have downloaded pirated copies of its films.
The smut-mongers will now write to the people associated with those IP addresses, after the High Court has approved the intended text of the letter. A judge toned down the language of the first letter, which the company says will "seek to find out more information regarding evidence of an infringement of our copyright."
The judge blocked the company from threatening users that O2 would "slow down or terminate your internet connection." Golden Eye was also banned from demanding a £700 money shot from each user. Instead, each user has the opportunity to dispute the claim, as the court acknowledges that an IP address cannot necessarily be tied to a person.
If they admit it, users must individually negotiate a settlement. And if they do not respond within 28 days, they could be found liable, which would be quite a blow.
The company claims it's been pounded hard by piracy -- harder even than mainstream movies, because pirates cannot replicate the cinematic experience. The company is also chasing websites that it argues encourage online piracy, as well as pirates of physical DVDs.
Is this the right way to address piracy, whether of porn or any other types of movie and media? Go down in the comments and tell me your thoughts, or come hither to our Facebook page.
Vodafone CEO's pay hits £14 million for 2012 - The Guardian
Colao’s pay at Vodafone doubles to £14m - Financial Times
June 1, 2012 10:53 pm
No comments:
Post a Comment