The founder of Boost Mobile said he’s encouraged by the news the FCC chairman is signing off on the T-Mobile/Sprint merger deal with conditions—including the divestiture of Sprint’s Boost prepaid business—but like pretty much everyone else, he’s waiting for more details to emerge as the process moves forward.
“There’s a lot of excitement around the merger and the FCC’s comments and the commissioners’ comments,” said Peter Adderton, founder of Boost Mobile. “I think the reality is the devil is going to be in the details.”
FCC Chairman Ajit Pai said on Monday he is endorsing the proposed $26.5 billion merger between the companies because it will be in the public interest given the “significant commitments” the companies are now making, and he’s recommending his colleagues at the FCC approve it. Commissioner Brendan Carr and former Commissioner Mignon Clyburn also released separate statements in support of the deal with the new conditions.
The transaction still needs approval from the Department of Justice (DoJ).
One of the conditions is that Boost Mobile, one of Sprint’s prepaid brands, be divested to a “serious and credible buyer who can compete aggressively in prepaid services on a long-term basis,” according to a joint Sprint/T-Mobile filing with the FCC.
“New T-Mobile commits to identify the buyer of Boost and submit the negotiated MVNO agreement to the FCC within 120 days of closing of the merger,” subject to two 30-day extensions, the filing stated. There are monetary penalties that can be enforced by the FCC if New T-Mobile fails to meet its commitments.
Boost Mobile is an MVNO that uses Sprint’s network to offer services to its prepaid customers. It was founded by Adderton in the U.S. in 2001 after he founded Boost Mobile in Australia. Nextel Communications bought it in 2004. Eventually, it became a subsidiary of Sprint after it acquired Nextel in 2006.
Adderton had been calling for prepaid divestitures in the T-Mobile-Sprint deal and has made no secret of his intention to be part of Boost’s future. He said he intends to be among those in the running to buy it, and “I’m sure we won’t be the only ones in there.”
It’s not clear who will be qualified to bid for the Boost business, but Adderton said he does not believe selling it to a rival company like TracFone Wireless, whose parent is América Móvil, would be in the public interest. Nor would be selling it to Verizon or AT&T be a good idea in his view.
The National Wireless Independent Dealer Association (NWIDA) has been united with Adderton in calling for prepaid divestitures. The organization said today that it’s always been NWIDA's position that it would be difficult, if not impossible, for the New T-Mobile to keep both T-Mobile's Metro PCS and Sprint's Boost brands, and particularly their indirect-driven distribution.
“This news at least provides a good start to keeping the independent dealer owned Boost stores,” NWIDA said in a statement. “This is a positive step for the 8,000+ small and medium businesses and the nearly 30,000 employees of those organizations. We hope those companies who will bid for Boost will, as Boost founder Peter Adderton has already done, pledge to keep these businesses in business, and we look forward to working with any company who has an interest in buying Boost.”
The New T-Mobile is committing to offer the Boost buyer terms for a six-year wholesale MVNO agreement that will include wholesale rates that will “meaningfully improve” upon the commercial terms reflected in the most favorable of T-Mobile’s and Sprint’s three largest MVNO agreements.
But further details, like how the buyer selection process will be run, are still up in the air. “I guess the question is going to be, who’s going to be the referee” to make sure that the new owner of Boost will indeed get the opportunity to compete, Adderton told FierceWireless. “I think that’s going to be absolutely critical.”
“There are just a lot of questions that need to be answered,” he said. “The sooner they move this process along, the better,” he said, adding that Boost team members and staff are going to need motivation and leadership, and “they’re going to need passionate people behind the brand.”
Adderton is still the largest shareholder of Boost in Australia, and it’s been his dream to see Boost become a global brand, in part by stitching together MVNOs across Europe and the U.S.
“It’s unfinished business for me until I see Boost as a truly global brand,” he said, explaining his passion for the brand. “I never lost interest.”