Edgar Filing: LEAP WIRELESS INTERNATIONAL INC

Definitive Additional Materials

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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(RULE 14a-101)

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LEAP WIRELESS INTERNATIONAL, INC.
(Name of Registrant as Specified In Its Charter)


(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Leap Wireless International, Inc. (“Leap”) is filing the attached presentation materials, which update the presentation materials filed with the Securities and Exchange Commission (“SEC”) on July 7, 2011 as Exhibit 99.1 to Leap’s current report on Form 8-K, the presentation materials filed with the SEC on July 13, 2011 on Schedule 14A, and the presentation materials filed with the SEC on July 15, 2011 on Schedule 14A, in connection with Leap’s solicitation of proxies for proposals to be voted on at its 2011 Annual Meeting of Stockholders. Leap may present the attached materials to stockholders and others on future occasions. The information contained in the attached presentation materials is summary information that is intended to be considered in the context of Leap’s filings with the SEC and other public announcements. Leap undertakes no duty or obligation to publicly update or revise this information, although it may do so from time to time.

In connection with the 2011 Annual Meeting, Leap mailed to stockholders its definitive proxy statement filed with the SEC on June 28, 2011 (the “Definitive Proxy Statement”). In addition, Leap files annual, quarterly and special reports, proxy and information statements and other information with the SEC. Stockholders are urged to read the Definitive Proxy Statement and other information because they contain important information about Leap and the proposals to be presented at the 2011 Annual Meeting. These documents are available free of charge at the SEC’s website at www.sec.gov or from Leap at www.leapwireless.com. The contents of the websites referenced herein are not deemed to be incorporated by reference into the Definitive Proxy Statement.

Leap and its directors, executive officers and certain employees may be deemed to be participants in the solicitation of proxies from stockholders in connection with the election of directors and other proposals to be voted on at the 2011 Annual Meeting. Information regarding the interests, if any, of these directors, executive officers and specified employees is included in the Definitive Proxy Statement filed by Leap with the SEC.

Building Value

July 18, 2011

Presentation of Financial and Other Important Information

Presentation of Financial Information

Historical financial and operating data in this presentation reflect the consolidated results of Leap Wireless International, Inc. (the “Company” or “Leap”) and its subsidiaries and consolidated

joint ventures for the periods indicated. The term “voice services” refers to the Company’s Cricket Wireless, Muve Music™ and Cricket PAYGo™ service offerings, and the term “broadband

services” refers to the Company’s Cricket Broadband service. This presentation includes financial information prepared in accordance with accounting principles generally accepted in the

United States (“GAAP”), as well as other financial measures referred to as non-GAAP. The non-GAAP financial measures, which include Average Revenue Per User (ARPU), Cost Per Gross

Customer Addition (CPGA), Cash Cost Per User (CCU) and adjusted operating income before depreciation and amortization (OIBDA), should be considered in addition to, but not as

substitutes for, the information prepared in accordance with GAAP. For definitions of these non-GAAP financial measures and reconciliations to the most comparable GAAP measures, please

see the information under the heading “Financial Reports – Non-GAAP Financial Measures” in the Investor Relations section of Leap’s corporate website (investor.leapwireless.com).

Proxy Solicitation

In connection with the solicitation of proxies, Leap filed with the SEC on June 28, 2011 a definitive proxy statement and has filed and will file other relevant documents concerning the

proposals to be presented at Leap’s 2011 Annual Stockholders’ Meeting (the “2011 Annual Meeting”). Leap also mailed the definitive proxy statement to its stockholders. In addition, Leap

files annual, quarterly and special reports, proxy and information statements and other information with the SEC. Leap’s stockholders are urged to read the proxy statement and other

information because they contain important information about Leap and the proposals to be presented at the 2011 Annual Meeting. These documents are available for free at the SEC’s

website (www.sec.gov) or from Leap (www.leapwireless.com). The contents of the websites referenced herein are not deemed to be incorporated by reference into the proxy statement.

Leap and its directors, executive officers and certain employees may be deemed to be participants in the solicitation of proxies from Leap’s stockholders in connection with the election of

directors and other matters to be proposed at Leap’s 2011 Annual Meeting. Information regarding the interests, if any, of these directors, executive officers and specified employees is

included in the definitive proxy statement filed by Leap with the SEC.

Forward-Looking Statements

This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements reflect management’s current

expectations based on currently available operating, financial and competitive information, but are subject to risks, uncertainties and assumptions that could cause actual results to differ

materially from those anticipated in or implied by the forward-looking statements. Our forward-looking statements include our discussions about our expected, future financial performance,

including as a result of our current and future product and service plan offerings, future plans to transition to LTE and expected contributions from management and Leap’s proposed slate of

nominees to the board of directors and are generally identified with words such as “believe,” “think”, “expect,” “estimate,” “intend,” “seek,” “anticipate,” “continue,” “plan,” “will,” “could,”

“should,” “may” and similar expressions. Risks, uncertainties and assumptions that could affect our forward-looking statements include, among other things: our ability to attract and retain

customers in an extremely competitive marketplace; the duration and severity of the current economic downturn in the United States and changes in economic conditions, including interest

rates, consumer credit conditions, consumer debt levels, consumer confidence, unemployment rates, energy costs and other macro-economic factors that could adversely affect demand for

the services we provide; the impact of competitors’ initiatives; our ability to successfully implement product and service plan offerings, expand our retail distribution and execute effectively

on our other strategic activities; our ability to obtain and maintain roaming and wholesale services from other carriers at cost-effective rates; our ability to maintain effective internal control

over financial reporting; our ability to attract, integrate, motivate and retain an experienced workforce, including members of senior management; future customer usage of our wireless

services, which could exceed our expectations, and our ability to manage or increase network capacity to meet increasing customer demand; our ability to acquire additional spectrum in the

future at a reasonable cost or on a timely basis; our ability to comply with the covenants in any credit agreement, indenture or similar instrument governing any of our existing or future

indebtedness; our ability to effectively integrate, manage and operate our new joint venture in South Texas; failure of our network or information technology systems to perform according to

expectations and risks associated with the upgrade or transition of certain of those systems, including our billing system; and other factors detailed in the section entitled “Risk Factors”

included in our periodic reports filed with the SEC, including our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed with the SEC on May 6, 2011.

All forward-looking statements included in this presentation should be considered in the context of these risks. We undertake no obligation to publicly update or revise any forward-looking

statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this

presentation may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. Investors and prospective investors are cautioned

not to place undue reliance on our forward-looking statements.

•

Executive Overview

•

Industry Perspective –

Rapid Growth of Prepaid

•

Business Update –

On Trajectory to Grow Stockholder Value

•

Board of Directors –

Experienced and Independent

•

Pentwater Proposal and Proxy Contest –

Opportunistic and Non-Compliant

•

Conclusion –

Vote FOR

Leap’s nominees on the WHITE Proxy Card

Agenda

•

Leap

implemented

significant

changes

2010

better

position

business

Simple, all-inclusive service plans

New device portfolio, including smartphones

Nationwide voice and data coverage

Additions to senior management to better align with customers and improve execution

Completion of significant back-office system enhancements

•

Believe

initiatives

delivered

dramatic

improvements

operating

performance,

demonstrated

by:

Customer churn at lowest levels in nearly a decade, with voice churn of 2.8% in 1Q11

Smartphones and accompanying $55 service plan comprised approximately 40% of our sales mix at 1Q11, with

customer upgrades and migrations continuing at unprecedented rates

Significant improvements in average revenue per user (ARPU), driven by adoption of smartphones and higher-revenue

service plans

•

Believe

changes

position

Leap

for

improved

financial

results

and

increased

stockholder

value

Leap

stock

54%

between

August

2010

–

after

new

initiatives

presented

Leap’s

Analyst

Day

–

and

July

12,

2011

Board and management continuing to implement additional initiatives to continue momentum and position the Company

for the future

•

Leap

led

experienced

and

independent

Board

Directors

Executive Overview –

Leap

Keep Leap on track for improved stockholder value –

vote FOR

Leap’s nominees on the WHITE proxy card

•

Pentwater

lacks

any

strategy

for

the

Company

beyond

actions

Leap

already

pursuing

•

Pentwater

interested

only

short-term

profit

–

and

has

reduced

its

net

holdings

Leap

stock

by ~40%

since announcing proxy fight

•

What Pentwater Didn’t Do

Discuss

operational

proposals/suggestions

with

the

Company

prior

initiating

proxy

fight

Disclose all material information when nominating directors

Commence

action

Delaware

for

months

after

being

informed

March

that

they

didn’t

comply

with

Bylaws

Ask for a waiver under Leap’s NOL preservation plan to purchase 5% or more of Leap stock

•

What Pentwater Did Do

Submitted

what

Leap

believes

non-compliant

nomination

one

day

before

end

notice

period

Reduced

its

net

holdings

Leap

stock

~40%

the

three

months

after

announcing

proxy

fight,

including

selling on day they filed initial proxy statement

Established

short

position

covering

than

1.6M

Leap

shares,

equal

~67%

its

2.4M

held

6/20/11

•

Votes

for

Pentwater

will

not

counted

absent

contrary

Delaware

court

judgment

Executive Overview –

Pentwater Capital Management

Keep Leap on track for improved stockholder value –

vote FOR

Leap’s nominees on the WHITE proxy card

INDUSTRY PERSPECTIVE

Rapid Growth of Prepaid

•

Innovative, leading prepaid wireless carrier in U.S.

with ~6 million customers

•

Nation’s 7th largest wireless carrier

•

Offers unlimited voice, text and data services and

national coverage under Cricket brand; flat rates and

no contracts

•

Targets young, ethnically diverse and value-

conscious customer base –

among the fastest

growing market segments

•

Leverages industry-leading cost structure to provide

services at prices below most competitors

•

Holds spectrum licenses in 35 of top 50 U.S. markets

•

Offers nationwide service via existing network and

strategic roaming partnerships

Leap Snapshot –

Prepaid Wireless Industry Leader

2006 –

2013E

CAGR:

14%

Prepaid

Postpaid

Prepaid

% of total

19%

33%

Share of Net Adds (%)

Subscribers (M)

Source: Oppenheimer Equity Research Industry Update, dated March 8, 2011

27%

Prepaid Segment Drives Wireless Industry Growth

•

Wireless subscribers increasingly using

devices for data services, internet access

and mobile applications

•

Mobile data traffic in North America

expected to grow 80% annually through

2015

Explosive Growth of Mobile-Only Internet Users

Smartphone Opportunity for Prepaid Carriers

•

To date, smartphones have been sold

predominantly to higher-end customers

•

With increased adoption of data services

and smartphones by the mass market,

significant opportunity exists for prepaid

carriers

Number of Users in North America (M)

4Q10 Smartphone Penetration

Source: Morgan Stanley Research Report, dated April 18, 2011

Source: Cisco Visual Networking Index: Global Mobile Data Forecast, February 2011

Smartphones are a Significant Opportunity for Prepaid

Leap’s Prepaid Penetration

Prepaid

Subscribers

Covered

POP

1Q11

(1)

Leap

T-Mobile

Sprint

Tracfone

MetroPCS

(1)

Based upon results for the quarter ended March 31, 2011, as reported in filings on Form 10-Q and/or earnings releases for Leap, T-Mobile,

Sprint, America Movil and MetroPCS; covered POPs data assumes 95M for Leap, 99M for MetroPCS and 280M for T-Mobile, Sprint and

America Movil

(2)

Based on America Movil’s earnings release for the quarter ended March 31, 2011

•

Leap’s penetration in the prepaid

segment is greater than Sprint

and T-Mobile

•

Although Tracfone has the

largest number of prepaid

subscribers, it has the lowest

EBITDA margin (7%) and lowest

ARPU ($14) among prepaid

competitors

(2)

Subs.

(MM)

(1)

5.8

7.7

13.1

18.5

8.9

Leap Has Increased ARPU Near Highest In Industry

Prepaid ARPU ($)

Leap

Sprint

T-Mobile

1Q10

1Q11

MetroPCS

1.5%

3.4%

3.2%

5.6%

% Increase

Tracfone

27.3%

Source: Results for the quarter ended March 31, 2011, as reported in filings on Form 10-Q and/or earnings releases

for Leap, MetroPCS, Sprint, T-Mobile and America Movil

Leap Has Significantly Lowered Churn to Best in Industry

MetroPCS

Leap

1Q10

1Q11

Prepaid Churn (%)

Sprint

Increase /

Decrease (bps)

T-Mobile

Tracfone

Source: Results for the quarter ended March 31, 2011, as reported in filings on Form 10-Q and/or earnings releases for Leap,

MetroPCS, Sprint, T-Mobile and America Movil

BUSINESS UPDATE

On Trajectory to Grow Stockholder Value

Significant Business Initiatives in 2010

to Meet Evolving Customer Needs

•

Introduced all-inclusive, unlimited

nationwide voice and broadband

service plans

•

Eliminated activation fees and

telecommunications taxes to improve

customer experience

•

Experienced significant customer

adoption and migration to new

service plans –

at YE10, two-thirds of

customer base had migrated to new

plans

•

Introduced robust, new line-up of

affordable devices, including

smartphones, touchscreens, feature

phones and broadband devices

•

Increasing customer demand for new

smartphones driving selection of higher-

revenue service plans and increased

ARPU –

40% of new handset sales in

1Q11 were for smartphones

•

Entered into nationwide roaming

agreements to allow nationwide product

and service offerings

•

Entered into nationwide wholesale

agreement to supplement 95M CPOP

network with Sprint’s nationwide 3G

network

•

Believe agreements improve competitive

position and enable Leap to strengthen

brand, attract new customers and

enhance and expand nationwide retail

distribution

New Plans

New Devices

Nationwide Reach

Other Key Initiatives Furthering Leap Performance

•

Transitioned executive management team to more closely align with customers and improve execution

Appointed new EVP/COO to lead customer focused support organizations

Appointed new EVP, Field Operations and appointed three area presidents to improve field execution

Added other senior management leaders focused on vision and execution

•

Fundamentally overhauled back-office systems

Replaced billing, inventory and point-of-sale systems

Believe new systems significantly improved planning, forecasting, supply chain and procurement capabilities

•

Continued management of balance sheet for liquidity and growth

Refinanced

$1.1B

senior

unsecured

debt

2020,

reducing

cash

interest

expense

$10M

annually

Recently issued $400M of senior notes to provide additional working capital for growth initiatives

•

Entered into key strategic transactions

Formed new joint venture in South Texas, acquiring ~323,000 former customers of Pocket Communications to create Leap’s most

deeply-penetrated market

Acquired complete ownership and control of Cricket markets in Chicago, Southern Wisconsin and Oregon

Believe

transactions

improved

competitive

position

increasing

our

strength

and

scale

while

expanding

offerings

customers

•

Better utilization of spectrum resources

Entered into agreement to swap 10-MHz of unused spectrum in exchange for 10-MHz of additional spectrum in 7 existing Cricket

markets

•

Developed

and

launched

unique

Muve

Music

service

Unlimited music-download service designed specifically for mobile devices

Expect service will provide Leap with differentiated product in nationwide, mass-merchant retail channels

New Initiatives Driving Churn Down …

•

1Q11 churn reached lowest level in

almost 10 years:

–

Consolidated churn of 3.1%, improving

140 basis points Y-O-Y

–

1Q11 voice churn of 2.8%, improving

170 basis points Y-O-Y

•

Churn improvements believed to be

direct result of changes management

implemented:

–

All-inclusive pricing

–

Smartphones at affordable prices

–

Nationwide voice and data coverage

•

Believe lower levels of churn signal

productive, structural business change

–

May experience some near-term

moderation in churn improvement

Voice Churn

2011

2010

2009

2008

Y-O-Y Change in Voice Churn

Worse

Better

2010

2011

Source: Leap earnings releases for each of the fiscal quarters in 2008, 2009 and 2010 and for the quarter ended March 31, 2011 and

other internal data

…

And Improving ARPU …

Average Revenue Per User

2010

2011

•

1Q11 ARPU increased over $1 Y-O-

Y and Q-O-Q due to:

–

Improved device portfolio

–

All-inclusive service plans

–

Improved voice churn

•

Expect ARPU improvements to

continue in coming quarters due

to:

–

Increased smartphone penetration

–

Higher Broadband ARPU and

potential Muve Music uptake

Source: Leap’s quarterly reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010, September 30, 2010 and

March 31, 2011 and Leap’s annual report on Form 10-K for the year ended December 31, 2010

…

Putting Leap On Trajectory for

Improved Financial Performance

2011

2010

$5.1

$49.2

($478.1)

($27.0)

($18.1)

$614.6

$630.8

$600.6

$636.6

$678.4

Operating Income

(Loss)

Adjusted OIBDA

Broadband Services

Adjusted OIBDA

(Investment)

Voice Services

Adjusted OIBDA

($ in millions)

Service Revenues

•

Q-O-Q improvements in 1Q11

service revenues due to:

–

Subscriber growth

–

Uptake of higher-ARPU service

plans

•

Y-O-Y decrease in 1Q11 adjusted

OIBDA reflects:

All-in-monthly pricing which

eliminated ~$130M of annual

revenue from late/other fees

Investments in equipment subsidy

and product cost to support

transition to smartphones and

national coverage

•

Believe beginning to benefit from

cost leverage

•

Expect adjusted OIBDA margin

improvement in the coming quarters

Source: Leap’s quarterly reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010, September

30, 2010 and March 31, 2011 and Leap’s annual report on Form 10-K for the year ended December 31, 2010; note

minor calculation differences in reported numbers due to rounding

(1)Includes one-time ~$3M expense associated with South Texas joint venture

Adjusted OIBDA

$127.5

$154.6

$111.1

$82.6

$90.3

($4.5)

$17.4

$12.1

$24.5

$22.2

$123.0

$123.2

$172.0

$107.0

$112.5

(1)

Positive Trends Continuing

Outlook Discussed at 1Q11 Earnings Conference Call

Current 2Q11

Outlook

Expect positive voice net additions in 2Q11 and voice gross additions closer to 2Q10 reported levels

Expect decrease in number of Broadband customers

Expect adjusted OIBDA margin improvement from 1Q11 to 2Q11

Upgrade activity and associated cost expected to decline seasonally in 2Q11

Expect ARPU improvements to continue at pace similar to recent improvements

Churn expected to follow 2008 patterns but at reduced levels

2Q11 Update: Y-O-Y churn improvement in 2Q11, with improvement moderated

Expect Cash Cost Per User (CCU) to flatten or decline from 1Q11 to 2Q11

Cost

Per

Gross

Customer

Addition

(CPGA)

–

Expect

device

subsidy

expense

increase

due

change

dealer

compensation

2Q11 Update: Increased subsidy expense in 2Q11 will also reflect successful promotional activity in the quarter

CPGA –

Expect sales & marketing spending levels to remain similar quarter over quarter

Expect to have over 100,000 Muve Music customers soon

Strategic Initiatives To Drive Growth in Voice Customers

Expanded

Branded

Distribution

Competitive

Devices, Service

Plans & Coverage

Expansion of

Unlimited Music

Product

Improved

Customer

Awareness

LG Optimus C

Ground-breaking music service

•Unlimited access to millions of full-track songs and ringtones that reside

on mobile device, as part of $55/month service plan

•Believe will provide Leap with differentiated product in national retail

Broadened marketing efforts

•Expanding marketing programs outside of traditional customer

demographic to appeal to all value-conscious consumers

Leap’s retail presence is growing

•Expanding distribution in Cricket-branded stores and national retail

•Expect significant portion of retail expansion in time for holiday selling

season

Improved offerings to increase competitive position

•Building on introduction of all-in monthly service plans and nationwide

coverage with introduction of new and evolving smartphone devices

MVNO Agreement –

Rapid Path to Nationwide Scale

•

National retail playing increasingly

important role in prepaid wireless

Scale becoming a competitive advantage

•

MVNO agreement with Sprint entered

into in August 2010 expected to provide

Leap with nationwide reach and scale

Believe rapid, efficient means for Leap to

gain major presence in national retail

Believe provides more cost-effective path

to launching service in additional markets

•

Launch expected in second half of 2011

•

Facilitates launch of Muve Music

nationwide

Optimizing our Network for Multiple

Product Opportunities

Utilizing Data Network Capacity

Source: Internal Leap projections of network capacity and current and expected customer data product

usage and performance, which are subject to change.

Continue to see strong demand

for data services due to continued

strength of smartphone service

plans

Expanding and managing network

capacity through:

Device mix, market-level focus

Network management

initiatives

Additional equipment and cell

sites

Potential for session-based

data

Consumer trends driving strong

uptake in smartphones and other

higher-ARPU services

Opportunity to generate

significant cash flow

~1M

~2.8M

~1.8M

Approximate capacity usage as of 1Q11

4Q10 Capacity Forecast

1Q11 Capacity Forecast

Strategically Implementing LTE to

Support Next Phase of Growth

Leap’s LTE implementation being managed through gradual ramp-up and

phased

place

when

costs

LTE

devices

reach

attractive

levels

for

our

customers

Leap is launching its own LTE network beginning in 2011 and

expects to supplement its LTE facilities coverage through roaming arrangements

Industry Milestones

2013

2012

2011

2010

Leap Milestones

First LTE

markets in the

U.S.

First LTE smartphone

launches

Integrated LTE

chipset available

Integrated LTE

devices introduced

Device costs begin hitting

broadly appealing

consumer price points

Leap launches

R&D market

Expected launch of first

Leap LTE trial market

Expected Leap commercial LTE deployment

Expected growth of

4G on prepaid

Leap’s Strategy Widely Supported

“Leap executed well by driving growth mainly

through smartphone adoption while containing

opex. Despite upcoming seasonal net add

softness in 2Q and 3Q, we expect the benefits

of rising ARPU to translate into EBITDA

margin expansion

from 17% in 1Q11 to 22%

in 4Q11.”

Deutsche Bank, 5/6/11

“We believe that given the high ASPs for LTE handsets coupled

with the painfully slow smartphone experience of 1xRTT speeds,

Metro finds itself between a rock and a hard place. Leap, on the

other

hand,

might

have

found

itself

sweet

spot,

where

it could take advantage of falling 3G handset prices and leverage

smartphone growth (and the Android platform) to grow EBITDA

and margins faster than consensus anticipates in 2012.”

Citadel, 5/25/11

“We expect continued success in existing markets plus

ramping execution in new markets will allow Leap to

generate

16%+

EBITDA

CAGR

2011-2014

which

the current 2012E EBITDA multiple leaves the company, in our

view, among the most attractively valued growth-based

investments in our coverage universe.”

Bank of America Merrill Lynch, 5/5/11

“We believe the increased smartphone

penetration coupled with the All-

Inclusive plan will continue to improve

churn

such,

are

trimming

2011E

churn

by 20 bps to 3.6%.”

RBC Capital, 5/6/11

“Leap showed solid execution of its

turnaround strategy

that began back in

August ’10. While we continue to believe Leap

has good potential, in the near term, its go-to-

market strategy is still in transition and is

carrying substantial near term costs. LEAP’s

focus on smart phones is beginning to

show benefits in ARPU, churn, and

subscriber

growth

SunTrust, 5/6/11

;

.”

BOARD OF DIRECTORS

Experienced and Independent

Leap’s Independent Slate of Nominees

Leap’s Commitment to Good Corporate Governance

All directors (other than CEO) are independent under NASDAQ rules; all have

alignment of interests with stockholders

Wide range of relevant operational and financial expertise represented

Non-executive Chairman of the Board

Directors are elected annually

Each board committee composed entirely of independent directors

All directors attended more than 75% of Board and committee meetings in 2010

Company has adopted and disclosed Corporate Governance Guidelines

Leap’s Board Continually Looks To

Deliver Increased Value To Stockholders

•

In 2007, Leap engaged in discussions with MetroPCS following its unsolicited public offer

–

Board determined Metro’s offer allocated disproportionate synergy value to Metro and offered essentially no

premium to Leap stockholders

–

Leap and Metro’s discussions also limited by Leap’s 4Q07 restatement and FCC-mandated M&A “quiet period”

for spectrum auction participants

•

2008

and

2009,

Leap

approached

Metro

regarding

possible

joint

opportunities,

including

partnerships

own/operate

certain

markets

–

but

significant

discussions

did

not

develop

•

Leap

also

engaged

discussions

with

AWS

spectrum

holders

and

others

regarding

strategic and operating opportunities

•

2010,

Leap

undertook

comprehensive

review

strategic

alternatives

build

stockholder

value

–

Board added additional independent directors to help oversee process and ensure broad perspective

–

Appointed Special Committee of independent directors to oversee review

–

Special Committee and its financial advisors initiated discussions with numerous parties regarding potential

strategic opportunities, including MetroPCS

–

Leap also began developing important new product and service plan offerings, which it believed would

significantly improve operational performance

–

Special Committee and Board unanimously determined to pursue Leap’s current operational strategy rolled

out in 2010, which Leap believes has yielded significant results

•

Leap’s compensation

program

tied

corporate

performance,

aligning

interests

management with those of stockholders

–

Substantial majority of total compensation opportunity consists of annual cash bonus and long-term equity,

which are tied to corporate and individual performance

–

2010 was period of continued, intense competition within wireless industry and ongoing transition in Leap’s

business, as new initiatives were implemented to improve competitive positioning and operational

performance

–

Because many of Leap’s new initiatives were introduced in 2H10, they did not significantly impact full-year

2010 results but are now leading to improved financial and operational performance

•

Compensation earned by senior management, including CEO, reflects

business

and

responsible

executive

compensation

program

–

No increases in CEO’s $750K base salary or annual target bonus in 2010 or 2011, which were

significantly below 50th percentile

provided by peer companies

–

CEO recommended that he receive no cash bonus award for 2010

based upon Company’s business

transition and expected near-term business performance

–

More than two-thirds of CEO’s total compensation for 2010 consisted of long-term equity

compensation,

primarily

consisting

performance-vested

restricted

with

vesting

tied

stock

price appreciation

–

Remaining executive officers received no increase to 2010 or 2011 base salaries, cash bonus awards well-

below target bonus levels and equity compensation consisting primarily of performance-vested restricted

Responsible Executive Compensation Program

transition

Leap’s

PENTWATER PROPOSAL

AND PROXY CONTEST

Opportunistic and Non-Compliant

•

Since

announcing

proxy

fight,

Pentwater

has

reduced

its

net

holdings

Leap

stock

~40%

(even

selling

day

filed

its

initial

proxy

statement)

(1)(2)

•

Established

short

position

covering

than

1.6M

Leap

shares,

equal

~67%

its

2.4M

held

6/20/11

(2)

•

Announced

public

proxy

fight

without

first

discussing

operational

proposals

suggestions

with

the

Company

(and

promptly

started

selling

stock

price

rose)

•

Waited

until

end

nomination

period

attempt

nominate

directors

•

Leap’s

view,

did

not

comply

with

bylaw

requirements

•

Failed

disclose

material

facts

about

Pentwater

and

its

nominees,

including

that

one

nominee is related to Pentwater portfolio manager and true size of its short position

•

Has

offered

only

backward-looking

critiques

with

specific

strategy

for

the

Company

beyond

what

management is already doing

Pentwater Interested Only In Short-Term Profits

Pentwater Capital Management is an opportunistic investor with no long-term

commitment to Leap and interests that differ from other stockholders

(1)

According

Pentwater’s

definitive

proxy

statement

filed

with

the

SEC

July

2011,

Pentwater

sold

22,600

Leap

and

purchased 2,600 Leap shares on June 20, 2011.

(2)

See Pentwater’s definitive proxy statement filed with the SEC on July 5, 2011 for additional disclosure regarding Pentwater’s trading

activity in Leap common stock and options.

•

Leap

welcomes

stockholder

input

all

topics,

including

director

nominations

•

Leap’s

bylaws

designed

provide

fairness

and

transparency,

allowing

stockholders

fully evaluate

nominees’

independence and qualifications

•

Leap’s

view,

Pentwater’s

nominations

did

not

comply

with

bylaws

critical

respects

going

to the

heart

transparency,

independence

and

alignment

stockholder

interests:

Failed

disclose

that

one

nominee

father

Pentwater

portfolio

manager

and

nature

agreements/understandings between nominees and Pentwater

Failed

adequately

disclose

that

its

ownership

position

Leap

common

stock

was

substantially

hedged

by put options

Failed

disclose

whether

had

formed

group

with

other

activist

investors

who

have

recently

acquired

Leap common stock and who have acted in concert with Pentwater in past

•

Revised

bylaw

requirements

were

adopted

December

2010,

months

ahead

director nomination

period

and prior to Company’s receipt of any stockholder proposals

•

voted

for

Pentwater

nominees

will

not

counted

the

Annual

Meeting

absent

contrary

judgment by Delaware courts

•

Leap

believes

its

advance

notice

bylaws

are

fair

and

reasonable

and

similar

bylaws

many other

companies

including:

Allstate Corp., Boeing, eBay, Home Depot, FTI Consulting Inc., Fortune Brands, Hewlett Packard, Gilead Sciences, Inc.,

Juniper Networks, McGraw-Hill, PepsiCo, Safeway, Texas Instruments, United Continental Holdings, and VMWare

Leap’s Bylaws Ensure Disclosure of

Material Information and Overall Fairness

Cumulative

Ownership

(1)

(Millions of shares)

Pentwater’s Actions Are Opportunistic and

Reveal Weak Long-Term Commitment to Leap

Pentwater’s Short-Term Interest in Leap

Not Aligned with Other Stockholders

(1)

See Pentwater’s definitive proxy statement filed with the SEC on July 5, 2011 for additional disclosure regarding Pentwater’s

trading activity in Leap common stock and options.

(2)

According

Pentwater’s

definitive

proxy

statement

filed

with

the

SEC

July

2011,

Pentwater

sold

22,600

Leap

and purchased 2,600 Leap shares on June 20, 2011.

10/15/10: Pentwater sold

1.04M shares in one day

From 3/15/11 to 6/20/11

Pentwater sold 37%

of its Leap shares

•

Pentwater did not own any

Leap shares

as recently as one

year ago

•

Has actively traded in and

out of stock

over last 17

months

•

Sold 1.4M shares

in the three

months prior to its initial proxy

statement filing –

reducing its

net

position

~40%

(1)

•

Even on 6/20/11 (date of

Pentwater’s initial proxy filing)

reduced net position by

20,000

(2)

•

Had short position covering

more than 1.6M Leap shares

as recently as 6/20/11

Pentwater held

zero shares

February 5, 2010 –

June 20, 2011

8/3/10: Investor Day

3/10/11: Announced Proxy Fight

•

Lacks any strategy

for the Company beyond actions Leap already pursuing

•

Comments

are

backward-looking;

ignore

Leap’s

strong

position

today,

recent strong operating performance and prospects for improved performance

in 2011 and beyond

•

Nominees do not have same level of experience/expertise

as directors

they are trying to replace

•

Criticisms

Leap’s

corporate

governance

are

mis-informed

and

inaccurate

Pentwater’s Actions Are Ill-timed, Mis-informed and

Would Not Benefit Leap’s Stockholders

Pentwater

appears

interested

only

short-term

profit

–

and

has

reduced

its net holdings in Leap stock by ~40% since announcing proxy contest

Pentwater’s Claims …

versus the Reality –

Governance

Pentwater’s Claims

Reality

Leap’s Board lacks strong

corporate governance and

perspective

Four Leap directors have ties

to MHR and acted improperly

as directors of Loral Space

and Communications

Leap’s 2010 executive

compensation was

unreasonable

•

All

directors

elected

annual

basis

•

All

directors

NASDAQ-independent

(other

than

CEO),

with

wide

range

operational and financial expertise

•

Board

expanded

eight

2009

bring

additional

skills

and

perspectives

•

Two

new

candidates

bring

highly

relevant

skills

and

expertise

help

Leap

at this stage of growth

•

MHR’s 19.8% stake aligns its interests with other stockholders.

Unlike Pentwater,

MHR

has

never

reduced

its

stake

shorted

Leap’s

stock

•

Loral’s

stock

price

has

increased

~440%

since

Loral

decision

September

2008 –

and Dr. Rachesky, Mr. Harkey and Mr. Targoff all served on the Loral Board

during this time period

•

2010

executive

compensation

responsible

and

appropriate

light

corporate

performance and business transition

•

increase

2010

2011

base

salaries,

cash

bonus

award

for

CEO

and awards well below target bonus levels for other executives, and equity

compensation

primarily

performance-vested

restricted

Pentwater’s Claims …

versus the Reality –

Governance (cont’d)

Pentwater’s Claims

Reality

Leap adopted “poison pill”

entrench management and

stifle the voices of

stockholders

•

Tax benefit preservation plan adopted to deter potential “ownership

change”

under tax laws that would jeopardize ~$2B of Leap’s NOLs

•

Generally “ownership change”

occurs when greater than 50% change in

ownership by 5% stockholders in any rolling 3-year period. When Plan

implemented, Leap believed cumulative “ownership change”

was in the mid-40s

•

Plan restricted acquisition of 5% or more of stock by new holders without

exemption by Board, but also restricted existing 5% holders (including MHR Fund

Management) from acquiring additional shares

•

When Plan adopted, no stockholder had indicated it would be nominating directors

•

June

16,

2011,

when

finalizing

items

for

2011

Annual

Meeting,

Board:

•

reviewed cumulative “ownership change”

by 5% stockholders, which had

decreased to 29%

•

as a result of decrease, determined Plan was no longer necessary; and

•

terminated Plan –

after more than 2 months of silence from

Pentwater

and

before

Pentwater

filed

proxy

statement

pursue

contest

•

Pentwater

never

requested

waiver

acquire

greater

than

Leap

shares; in fact, Pentwater sold Leap shares

while Plan was in place

Pentwater’s Claims …

versus the Reality –

Strategic Transactions

Leap’s Board is entrenched, not

open to a strategic transaction

and should not have rejected

MetroPCS’

proposal to merge

with Leap in September 2007

Pentwater’s Claims

Reality

•

Leap’s

Board

continually

looks

for

opportunities

deliver

increased

value

stockholders; management has regularly stated that it sees the logic of further

consolidation

in the industry

•

2007,

Leap

entered

discussions

with

Metro

following

its

unsolicited

public

offer

Discussions limited by Leap’s 4Q07 restatement and FCC-mandated M&A "quiet period"

for spectrum auction participants

•

2008

and

2009,

Leap

approached

Metro

regarding

possible

joint

opportunities,

including

partnerships

own/operate

certain

markets

–

but

significant discussions did not develop

•

Leap also engaged in discussions with AWS spectrum holders and others

regarding strategic and operating opportunities

•

2010,

Leap

undertook

comprehensive

strategic

review

and

initiated

discussions with numerous parties, including Metro

Board added additional independent directors to help oversee process and ensure broad

perspective

After comprehensive review, Special Committee and Board unanimously determined to

pursue Leap’s current operational strategy, rolled out in 2010, which Leap believes has

yielded significant results

Pentwater’s Claims …

versus the Reality –

Operations

•

Leap

introduced

all-inclusive

service

plans

response

customer

demand

as soon as possible within constraints of prior customer billing

system

•

Leap

has

experienced

strong

customer

adoption

and

migration

new

service plans –

at YE10, two-thirds of customer base had migrated to new

plans

Mis-timed move to an all-in

pricing model

Pentwater’s Claims

Reality

Emphasizing and poorly

executing

a faulty broadband

strategy

•

Leap

deployed

strategy

focused

increasing

demand

for

data

services

Led initially with broadband due to attractive device pricing

Consumers now transitioning rapidly

to smartphones as prices decline

•

Believe

Leap’s

strategy

success

Broadband contributed $72.2 of adjusted OIBDA over last 4 quarters

Believe 3G investment well-timed; initial Broadband product and

investment created opportunity for return in smartphone margins Leap

now realizing

•

result

slow

LTE

adoption,

competitors

now

forced

substantially increase 3G activities

Pentwater’s Claims …

and the Reality –

Operations (cont’d)

Pentwater’s Claims

Reality

Mis-managing handset

inventory

Mis-management of cost

structure relative to

competitors

•

Some

momentum

lost

mid-2010,

but

believe

issues

addressed

through

senior management changes and more robust back-office systems and

forecasting

•

Leap’s

underlying

cost

structure

similar

MetroPCS

when

adjusted

for relative market penetration

Recurring costs per unit (such as non-product network costs) are sensitive to

customer penetration

G&A spend similar when aligned with MetroPCS’

reporting format (which

excludes customer care and billing) –

See Appendix

o

Leap focused on minimizing absolute spend despite challenges associated with

managing approximately three times as many discrete markets

Higher CPGA costs reflect direct-channel focus

Device subsidy costs are lower due, in part, to lower indirect dealer

compensation costs associated with higher direct sales mix

o

Headcount

reflects

acquisition

former

Pocket

markets,

greater

number

discrete markets and higher number of direct stores

CONCLUSION

Vote FOR

Leap’s Nominees on the WHITE

Proxy Card

•

Leap

led

strong,

experienced

Board

and

management

team

that

are

creating

stockholder value

with strategy delivering results

Believe new business initiatives delivering dramatic operating improvements

–

including lower churn,

increased smartphone sales and significant APRU improvements –

and position Leap for improved financial

performance and increased stockholder value

Changes in executive team and new back-office systems in 2010 improve execution

Additional

plans

place

build

momentum

through

expanded

focus

value-conscious

customers and expanded nationwide distribution

•

Pentwater

only

interested

short-term

profit

–

Pentwater has already reduced its net holdings in Leap stock by ~40% since announcing proxy contest

–

Had short positions covering more than 1.6M shares as recently as 6/20/11

•

Pentwater’s

actions

are

ill-timed,

misinformed

and

would

not

benefit

Leap’s

stockholders

Pentwater lacks any strategy for the Company beyond actions Leap

already pursuing

Pentwater did not comply with Bylaws in Leap’s view and their proposals don’t stack up against

management’s on-going execution

•

Pentwater

not

the

right

choice

Leap’s Directors Are Creating Stockholder Value and

Committed to Company’s Long-Term Success

Do not jeopardize Leap’s positive momentum –

vote FOR

Leap’s

nominees

the

WHITE

proxy

card

APPENDIX

•

Frequency of future advisory votes on executive compensation

–

Leap’s

Board

recommends

annual

advisory

vote

•

Stock option exchange program

–

Exchange of “underwater”

employee options for lesser number of replacement options with

exercise price equal to current FMV

–

Members

Leap’s

board

and

executive

officers

will

not

allowed

participate

–

Only options with exercise price of $30 or higher are eligible for exchange (well exceeds

closing prices of Leap common stock for prior 52-week period)

–

Black-Scholes value of new options will be substantially less than value of surrendered

options; exchange will not result in incremental accounting cost

–

Replacement

options

will

subject

three

years

additional

vesting

–

Options exchanged will be returned to plans for future grants

•

Ratification

selection

PWC

Leap’s

independent

registered

accounting

firm

for

FY’11

Other 2011 Annual Meeting Agenda Items

Leap SG&A Comparable to MetroPCS

•

Leap SG&A comparable to Metro SG&A on apples-to-apples comparison

–

Metro reports SG&A in aggregate (1Q11: $169.8M); identifies selling cost component (1Q11: $91.9M) in CPGA

reconciliation

–

Leap separately reports G&A (1Q11: $95.4M) and selling cost (1Q11: $109.8M)

–

Leap,

however,

includes

Customer

Care

and

Billing

expense

(1Q11:

$33.7M)

reported

G&A;

Metro

does

not

include

reported G&A –

but instead includes in Cost of Service

–

Bar

charts

above

eliminate

$33.7M

Leap

1Q11

Customer

Care

and

Billing

expense

from

Leap

G&A

align

with

Metro

SG&A reporting methodology

•

Leap sells greater percentage of handsets in Company-owned stores. Leap Selling Cost reflects expenses

related to larger number of retail stores and retail store employees

G&A

Selling Cost

Source: Leap’s and MetroPCS’s quarterly reports on Form 10-Q and related earnings releases for the quarter

ended March 31, 2011. Covered POPs calculations based on 95.3M POPs for Leap and 98.7M POPs for MetroPCS

SG&A Per Covered POP 1Q09 –

1Q11

•

Leap currently operates in 65 markets and MetroPCS operates in 13

•

Relative quarterly spending varies depending on companies’

respective market launch activities and

promotional efforts

–

Increased sales and marketing expense for Leap in 1Q09 due to market launch activities in Philadelphia and Chicago

–

Increased promotional efforts for Leap in 3Q09 in response to competitive Boost Mobile activity

•

Despite significant difference in number of markets, only a 6% average difference in SG&A per covered

POP over last four quarters

Source:

Leap’s

and

MetroPCS’

annual

reports

Form

10-K,

quarterly

reports

Form

10-Q

and/or

earnings

releases

for

the

periods

presented.

Leap

MetroPCS

Leap Operates in More Markets with Less Population

Density than MetroPCS

Covered

POPs

(MM)

(2)

Total Markets

(1)

Based

upon

information

MetroPCS’s

annual

report

Form

10-K

for

the

year

ended

December

31,

2010;

MetroPCS

markets

include

Los

Angeles,

New

York

City,

San

Francisco, Dallas, South Florida, Detroit, Boston/Hartford, Philadelphia, Atlanta, North Florida, Sacramento, Central Florida and Las Vegas

(2)

Covered POPs calculated based on 95.3M POPs for Leap and 98.7M POPs for MetroPCS

7.6

1.5

Leap

MetroPCS

741

874

Leap

MetroPCS

Average Covered POPs

Per Market (MM)

Average Density Per Market

(Covered POPs / Square Mile)

(1)

Size of Leap's Operating Markets Has Grown

Source: Internal Leap information

•

Leap has launched markets in three primary waves: 36 original markets; 17 additional markets acquired in

Auction#58; and 12 additional markets acquired in Auction #66

•

The average size of each market (as measured in covered POPs/market) has steadily increased

Number of Markets

Avg. CPOP

Per Market

(Early 2000’s)

(2006)

(2008)

% of Coverage Overlap with Leap (Based on Square Miles)

Source: CoverageRight from American Roamer Database

Leap Has Minimal Coverage Overlap with MetroPCS vs.

Other Wireless Peers

Leap's Adjusted Capital Efficiency Better than MetroPCS

Source: Leap’s and MetroPCS’

annual reports on Form 10-K for the years ending December 31, 2008, 2009 and 2010 and information presented in companies’

1Q11 conference calls

29%

31%

Leap

PCS

2008-10 Adj. Capital Efficiency (%)

(1)

Adjusted Capital Efficiency defined as Adjusted Capex /service revenue; Adjusted Capex defined as capital expenditures plus assets acquired under capital leases

(2)

FY2011 LEAP management guidance from 1Q11 conference call; Leap added no assets under capital leases from 2008-2010 and calculation assumes no assets acquired under capital leases in 2011

(3)

FY2011 MetroPCS management guidance from 1Q11 conference call; service revenue of $4.5B estimated per Morgan Stanley Equity Research and calculation assumes no additional assets acquired

under capital leases in 2011

"Mid-

Teens"

16-20%

Leap

PCS

Projected 2011 Adj. Capital Efficiency (%)

(1)

“…current capex outlook…

remains in the mid teens as a

percent of service revenue”

(2)

“…current estimate for total

2011 capital expenditures is

$700MM to $900MM”

(3)

•

In 2008-2010, Leap invested in 3G network upgrade, which provided foundation for Company’s initial Broadband

product and expanding smart device offerings

•

Other carriers that skipped initial 3G investment now spending capital in 2011 to upgrade 2G networks to improve

limited customer experience for 3G smartphones on their networks

•

Leap and those other carriers will spend additional capital to upgrade networks: Leap for LTE to support future

device offerings and other carriers for 3G to support current device offerings

Adjusted Capital Efficiency Analysis

•

MetroPCS added $93MM, $92MM, and $77MM of capital lease assets in 2008, 2009, and 2010,

respectively, while Leap added none

•

These capital lease transactions are analogous to capital expenditures

–

Add assets to balance sheet and increase net debt

–

Due to capital lease accounting, this kind of lease “capex”

does not run through the cash flow statement

because at the initial transaction date no cash changes hands

•

Adjusted Capital Efficiency analysis includes these capital leases for MetroPCS

Source: Leap’s and MetroPCS’

annual reports on Form 10-K for the years ending December 31, 2008, 2009 and 2010

Adjusted Capital Efficiency Calculation

$MM

2008

2009

2010

Total

Metro PCS Adjusted Capital Efficiency Calculation

Service Revenue

2,437

3,130

3,690

9,257

Purchase of Property and Equipment

955

832

790

2,577

Assets Acquired under Capital Leases

262

Adjusted Capex

1,048

924

867

2,839

Adjusted Capital Efficiency

43%

30%

23%

31%

LEAP Adjusted Capital Efficiency Calculation

Service Revenue

1,782

2,242

2,483

6,507

Purchase of Property and Equipment

796

700

399

1,895

Assets Acquired under Capital Leases

Adjusted Capex

796

700

399

1,895

Adjusted Capital Efficiency

45%

31%

16%

29%

Adjusted Capital Efficiency Analysis

Similar Capital Efficiency for 2008-10 Even Without

Inclusion of MetroPCS Capital Lease Assets

29%

28%

Leap

PCS

2008-10 Capital Efficiency (%)

(1)

"Mid-

Teens"

16-20%

Leap

PCS

(1)

Capital Efficiency defined as capital expenditures/service revenue

(2)

FY2011 LEAP management guidance from 1Q11 conference call

(3)

FY2011 MetroPCS management guidance from 1Q11 conference call; service revenue of $4.5B estimated per Morgan Stanley Equity Research

Projected 2011 Capital Efficiency (%)

(1)

“…current capex outlook…

remains in the mid teens as

a percent of service

revenue”

(2)

“…current estimate for total

2011 capital expenditures is

$700MM to $900MM”

(3)

Source: Leap’s and MetroPCS’ annual reports on Form 10-K for the years ending December 31, 2008, 2009 and

2010 and information presented in companies’ 1Q11 conference calls

Similar

Capital

Efficiency

for

2008-10

Even

Without

Inclusion

MetroPCS

Capital

Lease

Assets