UPDATE 1-Leap, MetroPCS, Sprint shares fall on competition

*Tracfone advertises $45 a month unlimited mobile plan

*Pali starts covering Leap, MetroPCS with 'sell' ratings

*Leap falls 7 pct, MetroPCS down 5 pct, Sprint down 4 pct
(Adds details of Tracfone prepaid plan, analyst and carrier
comments)

NEW YORK, July 1 (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.

He said that the new offer would not make Verizon change
its own retail pricing, which includes an unlimited service
offer for $99 a month.

Mark Siegel, a spokesman for AT&T Inc (T.N), the No. 2
wireless service, said the company was happy with its current
pricing plans and would not speculate on any future changes.

Pali Research analyst Walter Piecyk initiated coverage of
both companies with "sell" ratings, citing competition concerns
in a research note emailed on Wednesday.

Piecyk expects that "competition in the unlimited prepaid
market will increase significantly over the next 12 months."

He set a share price target for MetroPCS at $9 and a Leap
share price target of $16, according to an email summary of his
research note.

Leap shares closed down 7.2 percent at $30.55 on the Nasdaq
while MetroPCS shares fell 5.1 percent to $12.63 and Sprint
Nextel (S.N) shares ended 4.2 percent lower at $4.61 on the New
York Stock Exchange.
(Reporting by Sinead Carew, editing by Gerald E. McCormick and
Matthew Lewis)