5G and Beyond

T-Mobile pays a premium for Ryan Reynolds' mobile customers

T-Mobile announced it will buy Mint Mobile, the MVNO backed by actor Ryan Reynolds. And based on a video featuring T-Mobile's CEO Mike Sievet and Reynolds, it looks like the Deadpool star will continue producing his tongue-in-cheek ads for Mint and, potentially, other T-Mobile offerings.

But according to the financial analysts at Wells Fargo, T-Mobile is paying a pretty penny for that star power. In a note to investors, the analysts estimated Mint counts around 3 million customers, and that T-Mobile's $1.35 billion purchase price for Mint would value each of those customers at around $450. That, they noted, is far more than the roughly $300 per customer Verizon paid in 2020 when it acquired TracFone's 21 million customers for around $7 billion.

However, those prices are far below the $575 per customer that Chicago private equity company GTCR spent when it purchased MVNO Consumer Cellular for around $2.3 billion in 2020. Consumer Cellular's customers are, nevertheless, generally viewed as far more valuable than the prepaid customers of brands like Mint Mobile and Tracfone because Consumer Cellular specifically targets older – and presumably more stable and wealthy – customers.

Regardless, the Wells Fargo analysts generally cheered T-Mobile's purchase of Mint (a deal that also includes Ultra Mobile and Plum). "It should provide some modest financial benefits as T-Mobile brings the Mint traffic onto its own network at minimal incremental cost. T-Mobile can also turbo-charge the growth of Mint Mobile by adding it to its vast retail distribution network," the analysts wrote.

Others agreed.

"We think the Mint Mobile brand especially has positioned itself uniquely among consumers, famously featuring part-owner actor Ryan Reynolds in its marketing efforts and offering plans as low as $15/month (which will continue under T-Mobile ownership). We are glad T-Mobile plans to utilize Mint's Direct-to-Consumer (D2C) marketing expertise across its broader portfolio, and that Mint founders David Glickman and Rizwan Kassim will stay on to operate Mint as a separate business unit, and that Ryan Reynolds will remain in his creative role," wrote the analysts at Raymond James in their own note to investors.

Broadly, T-Mobile's purchase of Mint Mobile continues the trend of big network operators snapping up other, "flanker" brands. Verizon's purchase of TracFone followed AT&T's purchase of Cricket provider Leap Wireless in 2014 and T-Mobile's own purchase of MetroPCS in 2013. Generally, such transactions allow network operators to offer services on their network across a variety of brands that might help tease out more customers in niche markets and demographics.

Light Reading reported last year that Mint Mobile was up for sale. However, according to some of the people involved in the discussions at the time, the company's asking price was a bit steep. "No way in hell," said one executive who evaluated the business during 2022.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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