Leap, MetroPCS, Sprint shares fall on competition

NEW YORK (Reuters) - Shares of Leap Wireless International Inc (LEAP.O), MetroPCS Communications Inc (PCS.N) and Sprint Nextel (S.N) fell on competition concerns as Tracfone Wireless advertised a new rival service plan.

Leap shares fell 7 percent while MetroPCS stock lost 5 percent after details emerged of a $45 per month unlimited service plan from America Movil (AMXL.MX) unit Tracfone.

Piper Jaffray analyst Chris Larsen said the Straight Talk branded plan would hurt U.S. carriers overall but he cited Leap and Sprint Nextel Corp's (S.N) Boost Mobile unit as particularly vulnerable to increasing competition in unlimited plans.

"We think the introduction of this plan is a negative for all U.S. wireless carriers, but primarily targets the prototypical Leap and Boost unlimited customer," Larsen said in a research note.

Along with MetroPCS these companies sell prepaid plans with unlimited calling. The weak economy has bolstered consumer interest in prepaid services, where customers pay for calls in advance but do not commit to a service contract.

But unlimited service packages have attracted new rivals as well as expanding the number of cost-conscious customers looking at prepaid as a way to save money.

"It's very clear to us that this is a competitive market," said Sprint spokesman James Fisher. "We're quite pleased with the response we've been getting on Boost Mobile so far and we believe customers see the value in what we offer."

Tracfone, the biggest U.S. prepaid provider with about 11.8 million users, is offering the plan using rented space on the network of overall U.S. market leader Verizon Wireless, owned by Verizon Communications (VZ.N) and Vodafone Group Plc (VOD.L).

Verizon Wireless spokesman James Gerace said that Verizon would ensure its network would not get overloaded if Tracfone's discounted offer causes a big increase in network traffic.