US prepaid operator Leap Wireless has reportedly hired Goldman Sachs to advise on its options on either being sold or merged with a rival. According to sources at the Wall Street Journal, the appointment is part of the operator’s efforts to “reassess its alternatives and check its options out there right now.” Leap’s board has also formed a three-person committee to assess strategic options. That committee – made up by newly appointed board members – is being advised by Morgan Stanley, sources say. It is understood that Leap’s advisors have been in talks with larger national rivals such as AT&T and Verizon Wireless over a possible acquisition. However, these talks have not led to a deal and bankers consider a merger with MetroPCS – a similar regional prepaid player – as a more likely option.

Leap Wireless has frequently been linked to a merger with MetroPCS and turned down an unsolicited all-stock offer from MetroPCS valued at US$5.5 billion in 2007. However, a merger is seen as more likely now as both operators are facing increased competition in the low-end prepaid sector from their larger national rivals. Sprint’s Boost Mobile subsidiary pioneered a US$50 unlimited prepaid monthly plan last year that led to a fierce price war in the segment. A combination of Leap Wireless and MetroPCS – which already have a roaming agreement in place – would create an operator with almost 11 million connections and near-nationwide coverage.