Leap Wireless placed on credit watch

Standard & Poor’s has placed Leap Wireless on credit watch with negative implications based on the credit agency’s heightened concerns about the company’s liquidity.

“Given Leap’s ongoing operating losses as it built out its 40 domestic wireless markets and introduced services, our concerns about the company’s liquidity has heightened,” said Catherine Cosentino, Standard & Poor’s credit analyst. “The company has some availability under its vendor financing agreements, but such financing may prove insufficient to fund anticipating operating losses if missteps in the business plan occur.”

Standard & Poor’s said that because of the heightened degree of wireless competition in 2002 and the limited mobility of Leap’s product, which does not provide roaming outside of a caller’s area, Leap’s ability to continue to grow its customer base aggressively and gain scale economies remains highly uncertain.

--Lynnette Luna, Senior Editor