T-Mobile makes case to FCC for Mint buyout

Representatives for T-Mobile and Ka’ ena Corporation met virtually with FCC officials last week to argue why T-Mobile should be able to acquire Mint Mobile and Ultra Mobile from Ka’ ena.

According to a June 5 filing with the FCC, T-Mobile presented a PowerPoint spelling out why the transaction will not harm competition or consumers. In fact, T-Mobile said it’s a much easier case than Verizon’s acquisition of TracFone for a number of reasons.

The move is notable given that some industry stakeholders advocate for more government scrutiny in T-Mobile’s potential $1.35 billion buyout of the Mint and Ultra brands. Mint is the brand promoted by actor and part owner Ryan Reynolds.

Both Mint and TracFone are MVNOs, or mobile virtual network operators, that use the networks of the facilities-based carriers. In the case of Mint/Ultra, its customers already are exclusively on the T-Mobile network. Most of TracFone’s customers were on Verizon’s network, but Verizon is still in the process of converting some customers from other networks onto its own. Verizon closed on the TracFone acquisition in November of 2021.

Mint Mobile serves about 2 million customers and Ultra Mobile has about 500,000 customers, according to T-Mobile’s filing. Mint is distributed almost exclusively online, whereas Ultra, which targets budget customers who want international calling, is distributed through third-party retailers like Walmart.

T-Mobile’s acquisition of MetroPCS has been a poster child of sorts for how networks are integrated. As it did with MetroPCS, T-Mobile plans to “supercharge” the Mint and Ultra brands, enabling them to grow faster and reach more customers across the U.S., according to the filing.

MVNOs have higher costs than mobile network operators (MNOs) because they need to pay to access the underlying network. Thus, the transaction will reduce costs for Mint and Ultra, allowing them to grow faster and reach more consumers across the U.S. “with high-quality plans at accessible prices,” according to T-Mobile.

In addition, Mint/Ultra will be able to piggyback on T-Mobile’s supplier relationships and purchasing scale, allowing it to negotiate better device deals and pricing for Mint/Ultra customers.

Because there’s no spectrum changing hands and Mint and Ultra don’t currently offer Lifeline or Affordable Connectivity Program (ACP) benefits, it might be more difficult for parties to oppose T-Mobile’s purchase of Mint/Ultra at the FCC. The Department of Justice may be another matter. In April, T-Mobile said it did not believe an extended DoJ review was necessary, but it respects the process and wasn’t speculating about any reported attempts to block it.

One bone of contention is how the government sees MVNOs relative to their MNO partners. Are they competitors or not? In T-Mobile’s filing, it highlighted quotes from government entities concluding that MVNOs are not independent competitors from their MNOs.

Also used as arguments in its favor: Mint and Ultra don’t target the same customer segments as T-Mobile’s prepaid brands, and as MVNOs, Mint and Ultra have limited ability to independently reduce prices or improve quality. Plus, they’re both already using T-Mobile’s network and don’t offer the aforementioned Lifeline or ACP benefits.