Federal prosecutors have launched a probe into T-Mobile proposed acquisition of prepaid brand Mint Mobile, and may file a lawsuit to block the merger on antitrust grounds, according to a report.
The investigation and potential lawsuit was first made public by business reporter Lydia Moynihan with the New York Post last Friday. The report said prosecutors with the U.S. Department of Justice (DOJ) are apparently interested in targeting a mega-merger backed by a high-profile celebrity to send a message to other companies who might be thinking of a similar acquisition.
The high-profile celebrity, in this case, would be Mint Mobile co-owner Ryan Reynolds, who expects to receive some compensation from the deal should it close, but would not transition over to T-Mobile in any official capacity. (Instead, Reynolds would serve as a brand ambassador and consultant for Mint Mobile.)
Mint Mobile was founded in 2016 as a budget wireless phone brand offering low-cost talk, text and data service. The service, which operates on T-Mobile’s 4G LTE and 5G networks, is unique in that it requires customers to purchase several months of service at once, but the wholesale model means subscribers wind up saving money compared to postpaid plans offered by T-Mobile, AT&T and Verizon.
In January, reports surfaced that indicated T-Mobile was interested in acquiring Mint Mobile’s parent company, Ka’ena Corporation, as part of a strategy to strengthen its consumer wireless business. Last month, the companies announced their corporate engagement, with T-Mobile prepared to spend up to $1.35 billion in cash and stock for Mint Mobile and two other subsidiary brands, Ultra Mobile and Plum.
The number of customers served by Mint Mobile and its two subsidiaries hasn’t been revealed. T-Mobile ended the 2022 calendar year with more than 113.6 million consumer and business lines of service. Some T-Mobile customers have more than one active line on their account, and T-Mobile is known to offer free lines of service to customers in good standing.
“It’s clear that T-Mobile’s ability to offer both the best network and value is bringing new customers to the un-carrier and enticing those who join us to stay,” Mike Sievert, T-Mobile’s CEO, said in a statement in January. “Our momentum won’t stop as we continue to translate our long-established 5G lead into overall network leadership and execute on our unique growth strategy. We are perfectly positioned to profitably take further market share in 2023 and beyond.”
The acquisition of Mint Mobile would certainly add to T-Mobile’s market share, and would follow an industry trend of wireless companies gobbling up smaller operators who sell low-cost service that operates on one or more of the Big 3 networks.
Verizon has been particularly aggressive in acquiring mobile virtual network operators, or MVNOs. In 2021, Verizon closed on a $6.9 billion deal to acquire TracFone and several of its subsidiary brands, including Walmart Mobile, Straight Talk and Total Wireless.