Yesterday, T-Mobile announced that it reached a deal, pending regulatory approval, to purchase Ka'ena Corporation including all of its subsidiaries and brands at a price of up to $1.35 billion. The purchase price is dependent on if a few incentives are met between now and the time the deal closes, which is expected to be by the end of the year.
Ka'ena brands include the MVNOs Mint Mobile and Ultra Mobile and the MVNE/Aggregator Plum. Plum operates as a wholesale partner of T-Mobile allowing startups to bring their own MVNOs to the market like the recently launched Nebula Wireless.
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T-Mobile's press release states that actor Ryan Reynolds, who took an ownership stake in Mint Mobile in 2019, will continue his creative role with the brand. Reynolds has starred in numerous TV commercials promoting the brand and has regularly marketed it to his millions of followers on social media. Mint Mobile, Ultra Mobile, and Plum founders, David Glickman and Rizwan Kassim will also remain on board at T-Mobile to help manage the brands.
It's not entirely clear why T-Mobile stepped in to buy Ka'ena and all of its brands. The amount of revenue they bring in and their subscriber counts pale in comparison to T-Mobile's and therefore may not add meaningful value to those metrics for T-Mobile, at least not immediately. Last month, T-Mobile reported that for the full year 2022, it had reached 113.6 million subscribers with service revenue of $61.3 billion.
Mint Mobile And Ultra Mobile Subscriber Counts
Ka'ena has never stated the amount of revenue it or any of its brands generate. However, the Mint and Ultra brands are lost cost providers and have to generate revenue accordingly. Mint Mobile has never publicly given a subscriber count. Roger Entner, of Recon Analytics, told Fierce Wireless that he believes the number of subscribers is likely two to three million, and probably closer to three.
Publicly available data does support Entner's claim. According to the Google Play store the Mint Mobile app has been downloaded over one million times. Apple does not publicly disclose how many times an app has been downloaded in its app store. However, given that half the country uses iPhones it's reasonable to expect a similar count of downloads for the iOS version of the app. With a likely combined app download count of two million plus, a two to three million subscriber count seems pretty reasonable assuming most of the people who have downloaded the app remain subscribers.
The Ultra Mobile app Play Store download count shows 100k+, however, Ultra Mobile didn't even release its current Play Store app until 2019 yet the brand was founded in 2011. Furthermore, Ultra Mobile built its subscriber base largely through dealers. So the app count is much less likely to be reflective of the number of Ultra Mobile subscribers there are than it is for Mint. Mint Mobile initially launched in the summer of 2016 as an online-only brand which may help put the app download count more in line with the number of actual subscribers they have. However, they did launch the sale of SIM cards at Best Buy in 2017 with a real store expansion in 2020 and began selling phones at Target in 2021. Jeff Moore, Principal of Wave7 Research, told Fierce Wireless that Ultra Mobile's last known subscriber count was 750k in 2017.
Ultra Mobile and Mint Mobile are both low-cost providers, selling wireless service for far cheaper than T-Mobile's Prepaid brands do, with the exception of the "Connect" plans that T-Mobile offered to gain regulatory approval to buy Sprint. The Connect plans are not featured at all on the T-Mobile Prepaid homepage giving an indication as to what T-Mobile really thinks about them. The revenue generated by the low-cost plans does not likely move T-Mobile's bottom line.
If T-Mobile Didn't Buy Mint Mobile For Its Subscribers And Revenue, Why Did It?
Boost Mobile founder and more recently the founder of MobileX, Peter Adderton, believes it was to stop someone else from buying the brand.
— Peter Adderton (@peter_adderton) March 15, 2023
And there may be some truth to that.
Ka'ena corporation had been looking to sell Mint Mobile and perhaps all of its brands since 2021. An article in the NY Post named Altice USA as an interested suitor with a then-expected sale price of $600 - $800 million. Altice USA launched its own wireless brand, formerly Altice Mobile but now called Optimum Mobile, in 2019. It would have been a quick way for Altice to acquire what's considered a fairly substantial number of subscribers for an MVNO. Perhaps Altice was still considering the brand.
There's also the DISH Network to consider. DISH has its hands full with a lot of problems right now, particularly after the cyber attack it was recently hit with. They had trouble keeping customers before the attack, a problem that's at least temporarily been magnified since the attack. However, if DISH ever wants to be serious about competing in the space they need to add subscribers, keep them, and grow. These are things that Mint Mobile has managed to do very well. Mint Mobile has been one of the fastest growing (if not the fastest) prepaid MVNOs in the last couple of years (postpaid cable MVNOs have grown the fastest in the MVNO space). Mint Mobile Google Play Store app downloads exploded between the end of 2020 and mid-2022, going from 100k+ installs to 1m+ in that span (source 1, source 2).
DISH has already bought several brands over the last couple of years, so adding another wouldn't be out of the question. Mint Mobile and Ultra Mobile both offer plans in the same price range that DISH offers with Boost Mobile and Boost Infinite (at least for now). Boost even offers multi-month plans just like Mint and Ultra, making the brands an easier continued sell to consumers for DISH. And Plum offers solutions to get MVNOs up and running, something that DISH may need once its network is fully operational nationwide.
If T-Mobile bought Ka'ena and its brands to stop another entity from doing it, it's a move to squelch the competition especially if the brands were to go to another carrier. For example, if DISH were to buy the brand, Mint, and Ultra customers would certainly be moved over to DISH's network in time. They may even be moved over to the AT&T network in the interim as DISH continues its own network build-out. DISH does have a relationship with AT&T. DISH could take advantage of Plum's partnerships with other MVNOs to move them off of the T-Mobile network.
It's also possible AT&T was interested in buying the brand. Since Verizon bought Tracfone and its associated brands, AT&T has found itself lagging just a bit behind the competition in the prepaid space. Verizon and T-Mobile are both home to over 21 million prepaid subscribers (source Verizon, source T-mobile) while AT&T sits at 19.1 million. AT&T has even been experimenting with multi-month plans for the last few years, but not quite to the scale as Mint. They may be interested in further exploring that market segment.
Of course, T-Mobile may have just bought Mint Mobile because it's a quickly growing brand. And maybe they want to expand into the multi-month market where they haven't previously competed in. Although revenue generated by the brand may not currently add much to T-Mobile's bottom line if Mint's growth trajectory continues that could change in time. And it will certainly help to push the brand's growth further with Ryan Reynolds staying on board.
An Overview Of MVNO Acquisitions
Since 2018, there have been quite a few acquisitions in the MVNO space. The purchase price and subscriber counts of each acquisition aren't always known. Below is a table comparing acquisitions over the years, you can see how T-Mobile's potential pick up of Mint Mobile stacks up.
|Brand Sold||Acquirer (Year)||Subscriber Count||Purchase Price||Cost Per Subscriber|
|Boost Mobile||DISH (2020)||8,266,000||$1.4B||$169|
|Gen Mobile||DISH (2021)||<100,000||Undisclosed||NA|
|Republic Wireless||DISH (2021)||200,000||Undisclosed||NA|
|FreedoomPop1||Red Pocket (2019)||1,500,000**||$84.375M**||$56|
|FreedomPop1||Tucows (Ting) (2019)||150,000||$3.6M||$24|
|TPO Mobile||Tucows (Ting) (2018)||9,300||$700,000||$75|
|H2O Wireless||Telrite (2019)||1,000,000+||NA||NA|
|GreatCall Inc||Best Buy (2018)||910,000||$800M||$879|
|Consumer Cellular||GTCR (2020)||4,000,000||$2.3B||$575|
|AirVoice||HTH Communications (2022)||Undisclosed||NA||NA|
|T-Mobile (2023)2||est 3-4 million||$1.35B2||$337.5 - $450|
1= Red Pocket and Tucows both acquired FreedomPop with Red Pocket getting a majority of FreedomPop subscribers
**=Figures not publicly disclosed and based on best estimates from previously reported data. See Red Pocket's Freedompop acquisition, and analyst's estimate of Ting's worth for more information on where these numbers came from.
2 = Deal is not official until passing regulatory approval. Purchase price dependent on certain incentives being met between time deal was announced and closing