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Technology Stocks : Leap Wireless International (LWIN) -- Ignore unavailable to you. Want to Upgrade?

To: pcstel who wrote (2120)	6/5/2002 2:19:50 PM
From: Art Bechhoefer	Respond to of 2737

Capital expenditures until now have been high because of the cost of entering new markets--promotions, discounts on phones, etc. Leap now has 40 markets and no plans to enter new markets. Thus, the capital expenses that went to new markets last year are no longer required. This represents a major savings. From statements made by Verizon officials here in upstate New York, it appears that both Leap and Verizon Wireless are getting customers who used to have more than one wired line. Some new customers are using wireless phones as their only system. Assuming this scenario is occurring elsewhere, the company that really benefits most is Leap. People will pay the $10 or so per month extra for the convenience of wireless over ordinary wired phones. A second source of increased revenue comes from value added services, including data communications. It's not clear to me how many of the 40 Leap markets have data services, but I understand some markets already have 1X and others are being added this year. Considering that capital expenditures are likely to be down this year, that some revenue from Pegaso will be reported, and that Leap has also sold off its rights to unneeded spectrum, I am not all that worried about cash flow and covenants. I believe that as long as Leap can continue building its subscriber base rapidly, it will meet its covenants and become an attractive takeover candidate. The fact that it is one of the lowest cost wireless operations (due to low prices paid for spectrum and the inherently more efficient utilization of base stations from the unlimited local call policy -- reducing the amount of capacity needed for high traffic periods -- means that Leap will be ripe for takeover any time its stock price is substantially below book value, as it is now. Ironically, because of its current low price, Leap is both a short term play and a long term investment. Art Bechhoefer