T-Mobile US Inc would buy Ka’ena Corp, the owner of Ryan Reynolds-backed budget service provider Mint Mobile, for up to $1.35 billion.
T-Mobile expects the deal to close later this year and doesn’t anticipate any changes to its 2023 financial outlook. Mint Mobile will be “slightly accretive’ to adjusted earnings before interest, taxes, depreciation and amortization.
The deal will allow T-Mobile to tap a larger share of the pay-as-you-go customer base, whose numbers are expected to swell as credit-challenged people shy away from hefty monthly bills, Reuters reported.
It will also provide a boost to T-Mobile’s business at a time when promotions from rivals Verizon and AT&T have driven up its churn rate, which refers to the percentage of customers who stop using a service.
The agreement consists of 39% cash and 61% stock, with the final purchase price set to be decided by Ka’ena’s performance during certain periods before and after the closing of the deal that is expected later this year.
The purchase will add slightly to T-Mobile’s core adjusted earnings, but is not expected to affect its outlook for the year.
“Over the long term, we’ll also benefit from applying the marketing formula Mint has become famous for across more parts of T-Mobile,” said Mike Sievert, Chief Executive Officer of T-Mobile.
Mint Mobile offers some of the country’s lowest priced mobile plans, starting at $15 a month for 4 gigabytes of wireless data. The companies didn’t disclose Mint’s subscriber count. Its annual subscriber growth over the past four years has been 50 percent, and revenue growth has been 70 percent or more a year, Glickman said.
The business has no stores, and sells phones and mobile plans entirely online. The service is provided by T-Mobile already as part of a wholesale network-sharing agreement.