T‑Mobile Buys Mint Mobile and Ultra Mobile. T-Mobile US announced the acquisition for up to US $1.35 billion. Mint Mobile is a direct-to-consumer (D2C) prepaid wireless brand, while Ultra Mobile, is a wireless service offering international calling options to communities across the country. Both companies are active in the prepaid wireless market, which in a substantial way targets the Hispanic consumer in the U.S. Why the deal is important for Hispanic marketing. 3 things to know.
T-Mobile is acquiring Mint Mobile’s and Ultra Mobile’s sales, marketing, digital, and service operations, and plans to use its supplier relationships and distribution scale to help the brands to grow and offer competitive pricing and greater device inventory to more U.S. consumers seeking value offerings. Budget wireless Mint Mobile is owned by actor Ryan Reynolds; post deal closure, he will continue on in his creative role on behalf of Mint; founders David Glickman and Rizwan Kassim will remain onboard at T-Mobile to manage the brands, which will generally operate as a separate business unit.
A prepaid wireless service, also known as pay-as-you-go and pay-as-you-talk, is a mobile device such as a phone for which credit is purchased in advance of service use (as opposed to post-paid services). The purchased credit is used to pay for telecommunications services at the point the service is accessed or consumed. Prepaid wireless tends to be used by lower-income consumer segments who do not want to incur the recurring expenses of a postpaid plan and/or do not have the credit history to qualify for a postpaid plan. Hispanic and African American consumers over-index in the prepaid wireless segment. According to a recent Hispanic consumer survey by Saber es Poder, “two-thirds of respondents said they’re on a prepaid plan.”
What are the Hispanic marketing implications of T-Mobiles’s new acquisitions? Three things you need to know.
1.Prepaid Wireless: A US$ 260 Billion Opportunity
The U.S. prepaid wireless market had a market value of more than US $260 billion in 2021, and globally is expected to grow at a 4.3% annual rate until 2029, according to Maximize Market Research. As of the third quarter of 2020, there were about 74 million prepaid subscribers in the United States, according to New Street Research. Nearly 80% of those subscribers were relatively evenly divided by Tracfone (owned by Verizon), T-Mobile (mainly Metro PCS and now called Metro by T-Mobile), and AT&T (mainly Cricket Wireless). In 2020 Dish acquired Boost Mobile, of which approximately a third of customers are Hispanic, and Sprint’s prepaid customers from Sprint as Sprint merged with T-Mobile. As a result, Dish became a nationwide U.S. wireless carrier. Dish’s leadership could not help but notice that in addition to Dish Latino and Sling’s Hispanic subscribers, Dish now had a substantial Hispanic customer base in the form of prepaid wireless clients. According to New Street Research, Dish (via Boost) had about 13% of the market in 2022, with the remaining 7% being ‘Other’ including Verizon’s non-Tracfone prepaid business.
…with T-Mobile gaining an edge by buying Mint Mobile and Ultra Mobile.
At the end of 2023, T-Mobile U.S. had around 21.578 million mobile prepaid customers, having added 338 thousand for the full-year 2022. The Mint and Ultra brands are complementary to the company’s current prepaid service offerings Metro by T-Mobile, T-Mobile branded prepaid, and Connect by T-Mobile. Now with the acquisition of Mint Mobile, Ultra Mobile, and another company under its umbrella: Plum Mobile, which offers MVNO enablement services. T-Mobile gains between 2 million and 3 million additional pre-paid customers, likely catapulting it to the leadership of the prepaid wireless market. T-Mobile does not disclose the Hispanic-specific amount of subscribers, it is safe to assume that the share of overall subscribers exceeds 25%.
2. T‑Mobile Buys Mint Mobile and Ultra Mobile Deepening Hispanic Marketing Initiatives
Hispanic segment marketing has been the daily bread for T-Mobile for many years as Diego Osuna, Hispanic Market Strategy Lead at T-Mobile, recently told Portada. One of the newly acquired companies has a very significant Hispanic customer base; Ultra Mobile, in January 2016, acquired rights from Univision Communications to manage the Univision Mobile brand. Ultra Mobile is specialized in international calling plans to Latin American countries. In May 2017, Ultra Mobile announced that it was closing down the Univision Mobile brand and that it would automatically transfer all Univision Mobile subscribers to Ultra Mobile.
T-Mobile has several initiatives targeting the Hispanic consumer. They include last year’s agreement with TelevisaUnivsion which substantially impacted the Hispanic streaming and video space. Both companies announced that T-Mobile and Metro by T-Mobile would be giving their new and existing customers a free subscription to ViX+, the premium SVOD tier of ViX, for a full year. In addition, T-Mobile recently announced that it will be the official wireless provider of Liga MX in the U.S. under a new multiyear sponsorship agreement secured for the league by TelevisaUnivision. According to Statista, T-Mobile had US $2.2 billion in advertising expenses in 2022. With an even larger Hispanic customer base after the Ultra Mobile and Mint Mobile acquisitions, the share of Hispanic advertising in T-Mobile’s overall marketing mix is poised to grow.
Data breaches, as for other telco companies, are a big risk factor for T-Mobile, particularly when it comes to the multicultural consumer. Last November, T-Mobile said that it suffered a data breach that impacted 37 million consumers. The telecom has disclosed eight hacks since 2018, with previous breaches exposing customer call records in January 2022.
3. T‑Mobile Buys Mint Mobile and Ultra Mobile Gaining D2C Expertise
T‑Mobile said that it will tap into the best‑in‑class digital D2C marketing capabilities of Mint Mobile to reach new customers, and create more competition in wireless. T-Mobile will be able to leverage Mint’s industry-leading digital D2C marketing expertise as part of its broader portfolio to reach new customer segments and geographies. “Mint has built an incredibly successful digital direct-to-consumer business that continues to deliver for customers on the Un-carrier’s leading 5G network and now we are excited to use our scale and owners’ economics to help supercharge it – and Ultra Mobile – into the future,” said Mike Sievert, CEO of T-Mobile. “Over the long-term, we’ll also benefit from applying the marketing formula Mint has become famous for across more parts of T-Mobile. We think customers are really going to win with a more competitive and expansive Mint and Ultra.”
“Our brands have thrived on the T-Mobile network, and we are thrilled that this agreement will take them even further, bringing the many benefits of 5G to even more Americans,” said David Glickman, founder and CEO of Mint, Ultra and Plum. “This transaction validates our meteoric success and will unite two proven industry innovators committed to doing things differently in the wireless industry,” Glickman asserted.
