Boost Mobile Founder Wants T-Mobile, Sprint to Divest Prepaids
(Bloomberg) -- T-Mobile US Inc. and Sprint Corp. emphasize the prospect of faster 5G service as they tout their proposed $26.5 billion merger, and say decisions will come later about their less glamorous prepaid brands MetroPCS and Sprint’s Boost Mobile.
A Boost founder has a suggestion: sell one of the brands to preserve competition for prepaid customers, who lack the credit record or income needed for a fancy calling plan.
“The two biggest fighting brands that have been driving prepaid prices down are going to become one, and that should not be allowed to happen," Peter Adderton, a director and the largest shareholder of Boost Mobile Australia, said in a May 18 interview. “It really is at the detriment of those customers. I call them the forgotten Americans. Because no one seem to be talking about them.”
T-Mobile announced its purchase of Sprint on April 29 and said the deal would bring greater competition in wireless, video and broadband. The combination would reduce the U.S. wireless industry to three major competitors from four, ensuring heavy scrutiny from regulators.
Sprint, with prepaid brands Boost and Virgin Mobile, served about 9 million prepaid customers in 2017, and T-Mobile had about 20.7 million, according to data compiled by Bloomberg. Together they have about 37 percent of the North American prepaid market.
AT&T Inc., which offers the Cricket prepaid brand, served 15.3 million and Verizon Communications Inc. had 5.4 million, according to the data.
The prepaid market is dwarfed by the post-paid, monthly subscription services offered by the big four. The new enlarged T-Mobile would have about 70 million subscribers. In 2017 Verizon had 111 million subscribers, and AT&T had 78 million.
Adderton said he’d ask the Federal Communications Commission and Justice Department to require T-Mobile and Sprint to spin off one of their major pre-paid units. The deal needs clearance from both agencies.
It seems likely that if needing to choose, T-Mobile would keep its MetroPCS brand and sell Boost, Adderton said. He said he’d like to bid, along with backers he declined to identify.
“As a founder of Boost it’s a passion of mine. It’s kind of like my baby,” Adderton said. “It’s emotional for us. We want it to keep being the challenger brand.”
T-Mobile and Sprint representatives didn’t immediately return emails seeking comment.
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