It’s not too surprising that T-Mobile US is acquiring Mint Mobile and its affiliate brands, Ultra Mobile and Plum, but the price tag, which could add up to $1.35 billion, might turn some heads.
T-Mobile announced today that it entered into a definitive agreement to acquire Ka’ena Corporation and its subsidiaries and brands, which include Mint Mobile, Ultra Mobile and Plum. Ultra Mobile is a wireless service that offers international calling options and Plum is a wholesaler.
Mint is the prepaid brand that many people have seen advertised by actor Ryan Reynolds, who owns a stake in the company. T-Mobile said it will pay up to a maximum of $1.35 billion, in a combination of 39% cash and 61% stock, to acquire Ka’ena. The actual price will be based on Ka’ena’s performance during certain periods before and after the closing.
Mint has been the subject of acquisition speculation for a couple years now. Reports surfaced in 2021 that Mint was being shopped around for anywhere from $600 million to $800 million. In January 2023, Bloomberg reported that T-Mobile was in talks with Mint about a potential deal; Mint already uses T-Mobile's network under an MVNO arrangement.
T-Mobile said today that the brands’ exclusive use of the T-Mobile network will continue. T-Mobile is acquiring the brands' sales, marketing, digital and service operations, and plans to use its supplier relationships and distribution scale to help the brands to grow and offer greater device inventory.
Analysts said the deal makes a lot of sense. Mint is the fastest growing MVNO in the U.S., said Techsponential President Avi Greengart. “They’re on a tear,” he said.
It gives T-Mobile access to a different sales channel, he said. The main T-Mobile brands, including the prepaid Metro by T-Mobile service, are very retail heavy. Mint has been the most successful direct-to-consumer, online-only MVNO in the U.S., he said, so that gives T-Mobile another way to reach customers it otherwise wouldn’t reach, and that includes a lot of Gen Z and Millennials that Mint historically attracts.
Cheeky humor
It was encouraging that alongside the press release, there’s a funny video of T-Mobile CEO Mike Sievert and Reynolds that shows both brands understand how Mint does its marketing – with viral-like ads from a big celebrity with an ownership in Mint and “very cheeky humor,” he said.
“That is a big part of the Mint Mobile charm, but so is the pricing,” he said. In the video, Sievert said T-Mobile will continue with Mint’s $15/monthly pricing.
“It’s this direct-to-consumer, asset-light sales channel that is really attractive, and I think that, as much as the subscribers and the growth, is the reason to acquire them rather than let then continue to succeed on T-Mobile’s network, which certainly would have been an option,” Greengart said. “This brings them in house and presumably they’ve done their due diligence.”
Jeff Moore, principal of Wave7 Research, echoed that sentiment. “Mint Mobile has been a strong, direct-to-consumer brand,” he said.
Moore said he doesn’t know how many customers Mint Mobile has, but Ultra Mobile had 750,000 subscribers as of 2017. Plum has been mostly behind the scenes about the MVNOs with which it does business, he said, but it’s been participating in the Prepaid Expo for several years. Plum is similar to Reach Mobile in the services it offers to MVNOs.
How many subs?
Mint Chief Marketing Officer Aron North told Fierce earlier this year that the company doesn’t disclose the number of subscribers it serves, but it has seen high adoption rates and “incredibly high customer satisfaction” with its fully digital sales and activation channels.
Roger Entner, founder of Recon Analytics, said he believes Mint has somewhere between 2 million to 3 million subscribers, and “closer to 3 than 2 would be my guess.”
Mint received a “spectacular wholesale deal” with T-Mobile as a reward for its support of the Sprint merger, so with Mint growing leaps and bounds, “I think Mint had the best deal in wireless,” Entner said. And with this latest transaction, “it’s quite richly valuated.”
Culturally, they’re a good fit, Entner added. T-Mobile is snarky and positions itself as the underdog. Back in the day, former T-Mobile CEO John Legere liked to portray himself as Batman. “I think Deadpool is an even better superhero” for T-Mobile, he said.
By securing Reynolds as a continued spokesperson, “they can hitchhike on there as well.”
It certainly sounds like Reynolds will be sticking around. In the video, Reynolds jokes about writing terms of the contract in crayon, but Greengart said it’s quite likely that his continued involvement in the marketing of Mint is written into the contract in "real ink."
According to the press release, Reynolds will continue in his creative role on behalf of Mint. David Glickman and Rizwan Kassim, Mint's founders, will remain on board at T-Mobile after the close of the deal to manage the brands, which will generally operate as a separate business unit.
T-Mobile expects the transaction to close later this year, and it does not currently expect the transaction to have any impact on the company’s 2023 guidance or its ongoing stock repurchase program.
A T-Mobile spokesperson said the transaction will follow the custom review process with the FCC and Department of Justice “and other applicable regulatory bodies.”