Amazon interested in buying Boost from T-Mobile, Sprint: sources

https://www.reuters.com/article/us-sprint-corp-m-a-t-mobile-amazon-com-e/exclusive-amazon-interested-in-buying-boost-from-t-mobile-sprint-sources-idUSKCN1T02OV

by Geeek • 7 years ago

122 85 7 years ago

reuters.com

Someone1234• 7 years ago

I wonder if Amazon or the T-Mobile/Sprint side leaked this? Perhaps T-Mobile/Sprint weren't eager enough to sell, so Amazon wants the regulator to know an offer was made.

tantalor• 7 years ago

Another perk for Prime members.

sdan2• 7 years ago

It strengthens their monopoly.

sidr• 7 years ago

Huh? Their monopoly in which market?

minderasure• 7 years ago

This would be a win-win. Tmobile and Sprint get their merger and a bucketload of cash to build out their 5G infrastructure. Amazon gets to piggyback off of their network and potentially claim some wireless spectrum.

brianbreslin• 7 years ago

I didn't realize Boost mobile still existed. Would be interesting to see Amazon build a google FI competitor which also rides on t-mobile spectrum in the US.

scarface748• 7 years ago

Sprint has been hemorrhaging money and customers for years. I have no idea why this merger is being fought. It’s not like Sprint is a real competitor.

But back on topic: Boost is just an MVNO running on Sprint’s CDMA network. What worse combination of technology can you have than being on Sprint’s network and CDMA?

maxerickson2• 7 years ago

What's wrong with CDMA?

I mean, the technology is used in most current wireless standards, so the complaint has to be that you can only use phones that are compatible with Sprint and the largest wireless network in the US?

scarface748• 7 years ago

GSM is a global standard that lets you use any phone just by putting in a sim. CDMA is not widely supported outside of the US. But even worse, CDMA is slow compared to GSM (HSDPA).

djchen5• 7 years ago

Boost also uses Sprint's LTE network.

scarface748• 7 years ago

Which doesn’t help because you still need a CDMA capable phone. That automatically means you both have fewer choices of phone on the network and most of the phones you get don’t work on GSM networks.

That also means it downgrades to a much slower network than GSM.

walrus01• 7 years ago

They don't want Sprint or CDMA. They want whatever contract is in place that allows Boost to be a T-Mobile MVNO. If I had to guess, the contract also has a renewal clause that allows Boost to renew the MVNO agreement further into the future than 5-6 years, at reasonably favorable terms whether tmobile wants to keep them or not, barring any major malfeasance.

tdhoot• 7 years ago

Correction: Boost is not a T-Mobile MVNO, it's a Sprint MVNO. I think Amazon wants assurances that the terms Boost has with Sprint will carry over to the new T-Mobile/Sprint entity.

excalibur• 7 years ago

I have no idea why this merger is being pursued. Take away Boost and Sprint's spectrum allocation, they have nothing left to bring to the table, aside from 50 customers and a shit network. What's the appeal there?

scarface748• 7 years ago

Unlike what Sprint did when it bought Nextel, when T-mobile bought MetroPCS, it rapidly shit down MetroPCS’s network and integrated it with its own. MetroPCS wasn’t just an MVNO. I would think T-mobile would do the same with Sprint.

ummonk• 7 years ago

Yeah, regarding the merger I’d rather have T-Mobile as a larger and stronger competitor against AT&T and Verizon.

joecool10299• 7 years ago

Yeah, regarding the merger I’d rather have T-Mobile as a larger and stronger competitor against AT&T and Verizon.

Counterargument: T-Mobile has been bleeding users hard off AT&T (the only US carrier to be declining in all sectors). Churn is low and postpaid adds are the highest in the industry. They have proven they do not require a merger to be successful.

bogomipz6• 7 years ago

"What worse combination of technology can you have than being on Sprint’s network and CDMA?"

Please explain why CDMA is so bad. Your post is devoid of any technical details for such an assertion. CDMA has a number of advantages over GSM that informed Verizon decision to go with it in the first place. Advantages of CDMA include operating very well in noisy environments, soft hand offs, and better spectrum utilization(frequency hopping)which allowed unlimited subscribers per cell.

Verizon, who as much as I dislike them as a company has one the best networks in the US in terms of both call quality and coverage.

scarface748• 7 years ago

But you’re also stuck with a phone that doesn’t work anywhere else. When you get into the boondocks when you are downgraded from their LTE network to their CDMA network you get much slower data than when you are downgraded from LTE to GSM.

greg5green3• 7 years ago

And Verizon is shutting down their CDMA network at the end of the year. It's an old technology that is being sunsetted. The problem with Sprint is that they are still relying on it for far too much (and they don't have broad enough spectrum holdings to make dual networks work well).

Additionally, a lot of Sprint's rural coverage relies on Verizon CDMA roaming -- which will be going away as Verizon sunsets their network.

joecool10299• 7 years ago

What worse combination of technology can you have than being on Sprint’s network and CDMA?

You can just stack even more shit on the shit: it's branded as Google Fi and requires a modified firmware and app to hand off the calling layer between Sprint or T-Mobile.

(EDIT: The shit I'm referring to are carrier application/backdoors like this, without them the phone will not work on network: https://gist.github.com/thestinger/171b5ffdc54a50ee44497028a... )

Also note, nothing like that is required for a phone on any other US carrier, just Fi and Sprint are special.

mdasen2• 7 years ago

I'm not a fan of Sprint and I don't think they provide a lot of competition in the industry, but...

Sprint hasn't been hemorrhaging customers. Between 2007 and now, Sprint has basically stayed flat at 54M customers in 2007, hitting a low of 48M customers in 2010, peaking at 60M customers in 2016, and back down to 54M customers today. http://tinyurl.com/carriertotals - this hasn't been updated in a while, but it's clear to see that Sprint has just been pretty steadily mediocre.

I think the merger is being fought because it's really hard to introduce a new wireless carrier. There's a limited amount of spectrum and as high-bandwidth applications take root, the barrier to entry increases. There's no only the inertia of customers and the normal barriers that companies have, but the hard barrier of not having spectrum.

Likewise, even when you're doing stellar, it's hard to make a dent in the distance between you and other companies. T-Mobile has been doing amazing things since current management took over in 2013. Still, despite T-Mobile basically getting all the industry growth over the past 6 years, they're a distant third to AT&T and Verizon. If someone were to launch a new carrier, it would likely take a decade or two before it started really making a difference.

It's also hard to say how much, if any, competitive pressure Sprint is putting on the industry. Sprint had been offering a free year of service (a $2,000 value for a family of 4) and had few takers. They've been offering $25/mo unlimited service for life (for a single line) and had few takers despite being less than half the price of competitors. When T-Mobile (re)introduced unlimited, Verizon and AT&T were forced to do the same. When Sprint makes moves, no one pays attention. However, if Sprint weren't there, would prices go up? It's certainly possible.

Similarly, it's unclear how long Sprint can hold on financially. They haven't been doing great and they'll need to make a large 5G investment in the coming years as their debt payments mount. However, Sprint has hung on for a long time under mediocre finances.

I think there's definitely the idea in many people's head that Sprint could team up with someone other than T-Mobile to provide a rejuvenated 4th carrier. However, the economies of scale and debt that Sprint has don't provide a lot of good options. Cable companies are likely to be hesitant to buy what is a losing business with crippling debt. If the deal doesn't go through, Sprint's market cap is likely to shrink and it's unlikely that SoftBank (Sprint's majority owner) would want to sell at that low valuation and it's unlikely that cable companies (or anyone else) would want to offer a premium. That kinda creates an impasse.

I think it's unlikely that Sprint could get a different partner on terms that SoftBank would accept. SoftBank drove a hard bargain and T-Mobile was willing to pay a premium for Sprint because they'd get the economies of scale one gets from 130M customers and one network. Would SoftBank be willing to accept half of what they'd be getting from T-Mobile? Probably not. "Half" might sound extreme, but it's also probably accurate. The deal is probably worth $38B to SoftBank conservatively assuming that the combined company is worth 20% more together than separately. Before the merger talk started back up, Sprint was worth $20B and that's when there was still the possibility of a merger, just no concrete talks. If a merger with T-Mobile is definitively dead, Sprint would probably sink below that - I'd say a 20-30% drop below that seems likely. So, without the T-Mobile merger, Sprint's market value goes so low that I don't see SoftBank being willing to stomach the loss. In fact, SoftBank bought into Sprint at a valuation of $28B. If they sold to anyone other than T-Mobile, they'd have to lock in a substantial loss.

Again, I tend to agree with your position, but I can also see why people really want to believe in a 4th competitive carrier. Losing competition isn't great. Yep, Sprint doesn't really seem competitive, but there is still that hope they might be competitive someday. Maybe someday they'll find a partner that will rescue them, maybe someday they'll find magic technology that will make them better.

"Maybe someday" could be the story of Sprint since the Nextel merger. Maybe someday Sprint will get broad coverage having acquired the low-band spectrum in the Nextel deal. Maybe someday WiMAX will rule the world. Maybe someday LightSquared will give Sprint an amazing LTE network. Maybe someday Sprint will buy Clearwire and use its deep spectrum to create the best experience. Maybe someday SoftBank will make Sprint amazing like their Japanese network. Maybe someday HPUE will magically make their 2.5GHz spectrum better. Maybe someday massive-MIMO will make their LTE network offer gigabit speeds everywhere.

But "maybe someday" still offers hope. While Sprint is independent, there's still hope that wireless could become a true 4-competitor market in the US. Once Sprint is gone, that hope is (mostly) gone.

(Also, Boost is an MVNO on Sprint, but if this deal goes through, it would be an MVNO on T-Mobile. So, any objection to the technology or current network situation isn't really important. The Boost MVNO would be running against T-Mobile's network as customers handsets allow and as customers upgrade.)

niftich3• 7 years ago

Boost is an MVNO that runs off of Sprint's networks today, but the sale of Boost is a commitment [1][2] T-Mobile made as part of their efforts to get the FCC to approve their merger with Sprint, with some very generous terms.

Remember that with LTE, there's no longer a divide between the GSM camp and the CDMA camp; it's the same LTE, although each carrier operates on various bands.

With the merger, and as phone firmwares are updated and incompatible handsets are cycled out, the combined LTE network is compelling. With Boost's current target market of urban youth, the fact most current Boost phones only support the Sprint's CDMA2000 3G and not T-Mobile's GSM-flavored 3G is less of an unfortunate fit than with a more general MVNO.

[1] https://newtmobile.com/wp-content/uploads/2019/05/FCC-Filing... [2] https://web.archive.org/web/*/https://newtmobile.com/wp-cont...

mehrdadn3• 7 years ago

Remember that with LTE, there's no longer a divide between the GSM camp and the CDMA camp; it's the same LTE, although each carrier operates on various bands.

Don't they have antennas in different locations though? Like even if your phone doesn't have compatibility issues with SIMs or bands, calling it "the same LTE" makes it seem like you could just pay someone else and get reception in the same areas which I don't think is the case?

niftich3• 7 years ago

Your phone using a different-besides-your-home network is called 'roaming' and it's not uncommon. For this to happen, your phone needs to know which networks it should try to authenticate against.

A while back, Sprint and T-Mobile announced they'd launch a roaming agreement for LTE that would last for 4 years, and that would be honored even if their merger doesn't go through. According to some people [1] this went into effect in Summer 2018.

[1] https://www.reddit.com/r/Sprint/comments/9548zg/tmobile_data...

greg5green3• 7 years ago

It's more that most phones support most of the bands all the US providers use, so when the roaming policy changes, a lot of the phones will still work. The phone will be able to register with the roaming network.

Also, they can set up the antennas to broadcast on multiple MNCs, so it looks like a native network (i.e. T-Mobile can run LTE towers that broadcast as both the T-Mobile and old Sprint network so all Sprint phones can connect without a problem) (of course, this depends on Boost phones supporting VoLTE).

untog• 7 years ago

Remember that with LTE, there's no longer a divide between the GSM camp and the CDMA camp

There is, because you're not always on LTE. Eventually LTE will be ubiquitous I'm sure, but right now it's still a concern.

RyanAF7• 7 years ago

Maybe cause they don't have any sustainable Revenue to justify their UNGODLY stock price? And, now need to compensate.

Let's not forget Microsoft was at $65 the majority lf their life.

adventured• 7 years ago

Amazon's stock is expensive, however markets - investors - do not price stocks based on past results typically. Stocks are priced largely on future expectations. This has been particularly true in the case of Amazon for a long time.

They'll have near ~$30 billion in profit within the next four to five years, which will bring their PE down to a high, but not ungodly, 30x.

AWS is worth $300-$350 billion now. Very soon it will soon be larger than Oracle and it's growing extremely fast for a large business (a high multiple would be granted). Their ad business is worth $100-$150 billion. In the next four to five years, those two businesses together will be worth as much as the entire company is today. That's a big part of what investors are betting on, along with the expectation that Amazon is going to continue to find new profit centers.

Sure, you might say, why is Amazon priced for earnings four or five years out? Well, that's the standard practice of pulling future returns forward. Almost always happens with growth companies, inevitably leads to a stagnation period. Amazon will continue to grow into their market cap and their annual returns will drift downward.

josephjrobison• 7 years ago

"It was not immediately clear why the largest U.S. online retailer would want the wireless network and spectrum."

I think we can wager a few guesses.

xyzzy_plugh• 7 years ago

I wonder how much they would save running all the Kindles over their own network (MVNO or not) instead of paying AT&T millions of dollars per month.

objektif• 7 years ago

Its not just AMZN, other media giants are also interested in buying assets from the merged company to start another provider. If thats the case I would be OK with merger going ahead.

KirinDave• 7 years ago

Oh. Sure. Just what Amazon needs: to also be a telecom. Sure would be a shame if there was a single industry they couldn't strongarm.

paxys• 7 years ago

I'm sure Amazon has evaluated every company that's available for sale at some point, but I'm willing to bet that's as far as their interest in Boost goes. This deal makes very little sense for them.

duxup• 7 years ago

A sort of Google Fi for Amazon?

crucifiction• 7 years ago

I doubt they want to start a cell company, more likely it is to have favorable terms for embedding 4G into Echo devices, making car and portable echos possible. They have done this for years w/Kindle, which would also benefit.

whoisjuan• 7 years ago

I doubt that would be the intention. At least not only that.

Amazon has some incredible network effects that would create a compelling cellphone service offering. They could bundle cellphone plans as an extra in Prime an undercut competition while giving unlimited access to Amazon.com, Alexa, Twitch etc.

Having a cellphone company makes a lot of sense for any of the big tech companies. It allows them to create end-to-end experiences that are compelling just because they can vertically integrate different moments of their customers journey.

axaxs2• 7 years ago

I'm honestly curious why. Boost is the worst major MVNO of the worst major carrier. I feel it would be less expensive to build an MVNO from scratch than it would be to try and improve that image..

knd775• 7 years ago

Sprint and T-Mobile are trying to sell Boost in order to get the merger approved. Amazon would most likely secure a promise the the MVNO agreement would carry over to T-Mobile after the merger.

Additionally, the brand image doesn't matter. They'd likely just rename it to something like 'Amazon Wireless'

axaxs2• 7 years ago

Gotcha. That makes some sense, thank you.

Amazon interested in buying Boost from T-Mobile, Sprint: sources

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