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The announcement Wednesday that T-Mobile is buying MetroPCS (PCS) directly impacts both Sprint (NYSE:S) and San Diego's Leap Wireless (LEAP), which may either end up in each other's arms or left standing alone.

The good news for Leap is that they no longer have to deal with MetroPCS's repeated acquisition attempts, because it's disappearing as a corporate entity.

The bad news is that its exit opportunities are reduced. After the FCC blocked AT&T's efforts to buy T-Mobile, it seems unlikely that Verizon (NYSE:VZ) or AT&T (NYSE:T) would be allowed to buy a large firm (such as #6 Leap). So the possible options are either to be bought by #3 Sprint, or for the #4 T-Mobile to add Leap with MetroPCS to its spectrum and customer base.

Leap's stock was up (briefly) up on speculation that it is now in play. The WSJ reported:

As Bernstein analysts put it today: "Leap Wireless is now the belle of the ball."

But maybe Bernstein should have added: "Depending on the ball."

Leap still has some ugly spots, or as Bernstein diplomatically put it: "consolidating Leap may be a bit more complicated than it first appears."

However, unlike MetroPCS, Leap has rural markets, limited spectrum and is late in LTE deployment, causing Bernstein to conclude that the company would not necessarily be a good fit for Sprint. Perhaps that's why the stock now is trading below today's opening price - or even its price Monday, before shares were bid up on reports of the possible MetroPCS sale.

With Leap's market cap at $0.5b, it's possible that T-Mobile could also make a bid. Leap's stock has been trading in a $6-10 range this year, far below its 2009 (post-financial crash) high of $39, let alone its all-time high of $95.90 in July 2007. With either acquirer, it would end San Diego's third largest public telecom company, after Qualcomm ($106b) and ViaSat ($1.6b) and ahead of Maxwell ($237m).

Meanwhile, the impact of the MetroPCS (or Leap) CDMA defection will be much less on Qualcomm (NASDAQ:QCOM) than if it had happened five years ago. Qualcomm is now getting processor design wins (particularly for smartphones) on GSM network LTE phones, including T-Mobile phones from Samsung (OTC:SSNLF) and HTC.

Source: Leap Is Back In Play