Boost Mobile founder says he'd buy unit back if the Sprint-T-Mobile tie-up gave him good wholesale deal
- Boost Mobile founder Peter Adderton says the details of a Boost divestiture will dictate his interest in buying back the business in a Sprint-T-Mobile deal.
- Adderton said he was in favor or a merger because Sprint won't be able to compete against AT&T, Verizon and T-Mobile without a tie-up.
Boost Mobile founder Peter Adderton said he might buy back the prepaid wireless company if Sprint divests the unit to merge with T-Mobile. But only if the merged company agreed to give Boost a good wholesale deal to sell its service to customers.
"What does that wholesale deal look like?" Adderton said on CNBC's Squawk Alley on Thursday. "In order for Boost to be able to compete, it's got to have a deal that allows it to do that."
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The Federal Communications Commission and other regulators "have to police" a deal to allow Boost to compete directly against T-Mobile's MetroPCS and a combined Sprint-T-Mobile, Adderton said. The FCC this week said it would bless a merger between Sprint and T-Mobile after the companies said they were willing to divest Boost Mobile, a mobile virtual network operator that uses Sprint's network and wireless spectrum to offer service to prepaid customers, who are often lower-income.
T-Mobile controls about 41% of the prepaid market through its ownership of MetroPCS, according to estimates from research firm MoffettNathanson. Sprint controls about 17% of the market. Given that level of market control, Adderton has to know that Boost could win as an independent company.
"They need to make sure that the new T-Mobile doesn't do this just as a facade to get their merger through," Adderton said. "Is this a remedy that's going to work? The answer is yes but only if that wholesale deal and the new owners have the ability to compete directly against MetroPCS and the new T-Mobile."
The Department of Justice hasn't decided if divesting Boost will go far enough in addressing the potential competitive harms of a Sprint-T-Mobile merger. T-Mobile is the third-largest U.S. wireless provider, followed by Sprint. Both carriers trail Verizon and AT&T in total customers.
Adderton sold Boost in 2004 to Nextel, which was later acquired by Sprint. Adderton is the largest shareholder of Boost Mobile in Australia, where it operates as a separate company. He said earlier this week that he wants Boost to be a "truly global brand" and called it "unfinished business" to unite the brands. He declined to offer specifics around the nature of his discussions with Sprint and T-Mobile on a potential acquisition.
Adderton said he believed a Sprint-T-Mobile merger "has to happen purely because I don't think Sprint is in the financial state" necessary to compete.