Leap Wireless International, posted widening third-quarter losses as competition for prepaid customers put a sizable dent in subscriber growth.

Leap lost $64.6 million, or 85 cents per share, in its third quarter, putting its losses 31 percent higher than last year's loss of $49.3 million, or 72 cents per share.

On November 5, 2009, MetroPCS reported earnings of $73.5 million, or 21 cents a share, up from $44.8 million, or 13 cents, a year earlier. Revenue jumped 30% to $895.6 million, with a 33% increase in services revenue and a 9.5% jump in equipment sales.

However, MetroPCS added only 66,000 customers, nearly half of what Wall Street analysts expected and down 73% from a year ago. The rate of customer defection jumped to 5.8% from 4.8% a year ago, although average revenue per user rose 35 cents to $41.08. MetroPCS has been able to mine more value out of their customers. Investors should nit take any of this as good news other than MetroPCS has bought itself more time than Leap. Being a cellular carrier is ultimately about numbers of subscribers and ARPU. What I am saying is that the deck is stacked against MetroPCS. Eventually MetroPCS will be in as much trouble as Leap.

I am not one to say I told you so but I did. When Verizon Wireless, AT&T, and especially Sprint Nextel jumped into the prepaid business I had said loud and clear that Leap and MetroPCS would see a negative impact on their revenue numbers. I got so bashed by so many analysts and others it made me realize they all had certain self interests in making sure that view was not discussed by anyone.

What is the solution? It is time for Leap and MetroPCS to merge.