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Did T-Mobile really spend $1.35B for Ryan Reynolds?

March 21, 2023 | Call me cynical and jaded but I am having a hard time understanding why T-Mobile spent up to $1.35B to acquire Mint Mobile (and the other brands in the Ka’ena Corporation) except for the fact that they wanted Ryan Reynolds as their spokesperson. Think I am crazy? Bear with me.

Neither T-Mobile nor Mint Mobile disclosed how many subscribers the MVNO has, but we do know they are all using the T-Mobile network at present. So rather than adding subscribers to its network, T-Mobile is simply bringing the Mint customers under the T-Mobile brands.

Contrast this with the other recent large MVNO purchase when Verizon Wireless purchased Tracfone in late 2021 for up to $6.9B: of Tracfone’s approximately 20 million subscribers, 13 million were already on the Verizon network. So the purchase gave Verizon an additional seven million subs, as well as control of the MVNO, etc.

For T-Mobile, there are no new subscribers to the network from the Mint purchase. Both Mint and T-Mobile said that the goal was to expand distribution into retail and other channels – note that the purchase price is ‘up to’ $1.35B assuming that certain goals are met. So the exact purchase price will not be known until later. T-Mobile did say that the deal will be ’slightly’ financially accretive, so they are certainly setting low expectations.

iGR does not know the number of subscribers Ka’ena and Mint have and there are multiple estimates out there. The most reliable numbers seem to estimate about 1 million - 1.2 million subscribers. Obviously far below Tracfone’s 20 million subs and a tiny fraction of the 113 million subscribers that T-Mobile already has (end of 2022), including 21 million prepaid customers.

So why pay north of $1 billion to get a few brands and some MVNO subscribers that are already on the T-Mobile network? Could it be that T-Mobile needs to kick-start its prepaid growth and wants to use Ryan Reynolds for corporate ads?

On the subscriber front, T-Mobile added 342,000 prepaid subscribers in 2021 and 338,000 in 2022 (according to the Q4 2022 financial statement). These numbers obviously include Mint Mobile. Prepaid churn did decline slightly in 2022, but so did growth. Contrast this to T-Mobile’s postpaid net adds (5.5 million in 2021 growing to 6.4 million in 2022) and it is clear that prepaid is underperforming for T-Mobile.

Now to the ads. Verizon has recently started a series of new ads featuring Paul Giamatti and some cast members from Saturday Night Live – sorry, cannot remember their names but at least I remember the ads! AT&T still has ‘Lily’ played by actress Milana Vayntrub (I had to look that up but at least I remembered her).

T-Mobile, in contrast, has….errrr…..errr….magenta? I actually just searched for ’T-Mobile ad’ and the Superbowl ad with Bradley Cooper popped up – sorry, I had forgotten that one. Obviously not memorable.

But the Mint Mobile ads that Reynolds does are memorable, mainly because they are very basic and goofy. In the press release announcing the Mint Mobile acquisition, T-Mobile made a point of saying that ‘following the deal’s close, Mint's founders David Glickman and Rizwan Kassim will remain onboard at T-Mobile to manage the brands, which will generally operate as a separate business unit. Owner Ryan Reynolds will continue on in his creative role on behalf of Mint.’

Will we see Reynolds also take on a larger role for T-Mobile, switching green for pink (sorry, magenta)? It would seem likely, otherwise $1B+ is a lot of money to spend for some brands and subscribers that are already using your network.

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