Leap Wireless and MetroPCS strike roaming deal

Analysts said the deal, which includes a spectrum swap, bolsters the chance the carriers could merge, and even if they don't, it strengthens their positions by expanding their service areas.

"We still believe a merger between the two carriers is likely at some point and view this as an encouraging step in the right direction," wrote William Power at Robert W. Baird.

Romeo Reyes at Jefferies & Co. said he believed the deal could be the first step to a full merger.

The deal didn't help their stocks. Leap shares fell $4.70, or 11.2 percent, to $37.32. MetroPCS shares fell $1.09, or 7.8 percent, to $12.81. The broader market was down sharply as a $700 billion economic bailout bill failed to win enough votes in the House of Representatives to pass.

The companies didn't reveal details of how the roaming agreements would work for their customers, but at best, it could mean that they can offer free roaming on each other's networks, wrote Goldman Sachs analyst Scott Malat.

Both carriers provide unlimited calling and texting for $40 per month within their relatively limited home calling areas. Leap, which provides service under the Cricket brand, had 3.3 million customers at the end of the second quarter. MetroPCS had 4.6 million.

The carriers will swap spectrum with each other in areas on the West Coast, Texas, Louisiana and Florida.

The lawsuits that were settled related to intellectual property, the companies said. In 2006, Leap sued MetroPCS, arguing that it violated a patent on flat-rate mobile service.