UPDATE: Oppenheimer Upgrades Leap Wireless International to Outperform on Consolidation Outlook

Oppenheimer raised its rating on Leap Wireless

from Sector Perform to Outperform. Oppenheimer said, "We expect the five smaller wireless carriers to merge into one company. Most industries reach three players over time, which is a reasonable scale/choice/competitive mix. The likely path to this is for Sprint to acquire LEAP, then merge with the combined PCS/T-Mobile within two years. CLWR will be last in the process. We are upgrading LEAP to Outperform … in view of these expectations. We believe T-Mobile acquired PCS for its spectrum (enables 20x20 LTE though with limited geographic coverage), and to gain a public currency and more coverage, and would like to have LEAP's spectrum also. Sprint has a major incentive to acquire LEAP before T-Mobile does, as it will be at a network advantage and may have a tough time negotiating a favorable merger with T-Mobile without it. Leap Wireless International closed at $5.90 on Wednesday.