Leap flying high

Leap Wireless has long been ignored by the industry, perhaps due to its market share, perhaps due to over expansion and Chapter 11 during the telecom bubble. More recently, it appeared doomed to be gobbled up by its rival Metro PCS, until they instead formed a roaming alliance.

On Wednesday, CNET ran an extensive Q&A with CEO Doug Hutcheson. Some of the answers are predictable, e.g. when other companies offer unlimited service it grows the market rather than hurting Leap (or its Cricket brand).

However, it offers a broad overview of how the prepaid carriers are both tapping unserved customers and also reflecting broader industry trends both here and elsewhere.

Perhaps most interesting are the profit numbers:

In some of our most mature markets, the average revenue per user (ARPU) is around $42 to $43. And we sell twice the number of voice minutes and two to three times the number of text messages as the large national carriers, which have ARPUs that are $10 to $15 higher than ours. And our profit margins fall in the high 30 percent range. In some older markets we are closer to 40 percent. We've said we expect to run in the mid-40 percent range.

Just to give you some perspective, these margins are a little lower than Verizon, but a little higher than Sprint. But we do it on much higher usage and lower ARPU. So this means that these providers can't expect to drop prices and lower ARPU and expect to make these same margins.

Leap has 90 million POPs — about 30% of the country, supplementing that with extensive roaming agreements (including that with Metro PCS).