(Reuters) - Shares of Leap Wireless LEAP.O fell 5 percent on Thursday after Piper Jaffray downgraded the low-cost wireless carrier to "underweight," saying the company's revival strategy announced in August has not had a "strong enough" impact.
The company had said in August that it expects customer dropouts to begin to decline as it adds new devices and launches fresh service plans.
“These efforts have helped improve certain metrics, such as customer retention, we do not think ... will be sustainable,” Piper Jaffray analyst Christopher Larsen said in a note to clients.
Leap -- which plans to rename itself as "Cricket" after one of its brands this year -- competes with MetroPCS PCS.N and Sprint-Nextel's S.N unit Boost Mobile, and caters to the pay-as-you-go market, which has low average revenue per user.
The analyst said that the prepaid market remains highly competitive, and the new plans which the operator introduced in August to corner market share have not helped much.
“Leap continues to have trouble regaining meaningful share, as competing service providers such as Sprint’s Boost and Virgin Mobile brands, Simple Mobile and Tracfone’s Straight Talk continue to do well.”
Shares of the company, have lost 36 percent of their value since the beginning of the year. The broader Dow Jones US Telecommunications Sector Index .DJUSTL rose 6 percent during the same period. They were down 4 percent at $10.79 on Thursday on Nasdaq.
Reporting by Himank Sharma in Bangalore; Editing by Vyas Mohan
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