Report: Sprint to buy FreedomPop for as much as $450 million

Report: Sprint to buy FreedomPop for as much as $450 million
The nation's third largest carrier, Sprint, is reportedly interested in buying MVNO FreedomPop. The latter is known for its low priced service that uses a combination of Wi-Fi and Sprint's nationwide network, to provide wireless service to its customers. A purchase of the upstart wireless provider could cost Sprint $250 million to as much as $450 million. If Sprint decides to make an investment in the company, it could lay out as much as $200 million. Rumors of Sprint's interest in the MVNO started around the time that it decided to abandon talks with T-Mobile about a merger.

A purchase of FreedomPop could help Sprint add revenue, while lowering the cost of customer acquisition. There is no guarantee that a deal can be worked out, and there are other wireless firms said to be taking a good, hard look at FreedomPop. But it wouldn't be an overstatement to say that Sprint needs to do something. Of the four major U.S. carriers, Sprint was affected the most by rolling out its 4G LTE network. The work left gaps in the carrier's pipeline, and that led to an exodus of subscribers from Sprint. Many walked into the open arms of John Legere at T-Mobile.

It didn't help Sprint that U.S. regulators forced it to put the kibosh on a long rumored deal to buy T-Mobile. By the end of this year, the two rivals are expected to switch positions with Sprint dropping back to become the fourth largest carrier in the states. New Sprint CEO Marcelo Claure recently said that in terms of subscriber losses and market share, "The company was in the weakest condition it has ever seen."

We have followed FreedomPop ever since the company began offering service to consumers on October 1, 2012. Since opening its doors, the company has been the subject of takeover rumors from time to time. Earlier this year, there was talk that the company would end up in the arms of AT&T or T-Mobile. Now, it is Sprint's turn to be linked to a possible FreedomPop acquisition. Both sides are refusing to comment on the rumor.

source: USAToday

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17 Comments

1. Augustine

Posts: 1043; Member since: Sep 28, 2013

Since FreedomPop is a MVNO on Sprint's network, this is a desperate move to add subscribers, lest TMUS jump it, without adding to Sprint's bottom line, but subtracting from it, since FreedomPop subscribers won't come for free.

6. Slammer

Posts: 1515; Member since: Jun 03, 2010

Why does it matter if it is a desperation move or not?. If memory would serve you correctly, AT&T and Verizon are as large as they are by purchasing partner MVNOs and smaller carriers for the last 16 years. In fact, AT&T was a huge boon for Cingular then back to AT&T branding and Alltel for VZW. Were these desperation moves as well? Let Sprint build just like the others have done. John B.

7. lsutigers

Posts: 832; Member since: Mar 08, 2009

Except it isn't because these subscribers are already counted as Sprint wholesale customers. Every carrier counts MVNO subscribers as wholesale customers.

2. iamoa unregistered

typo in 3rd para, 3rd line "New Sprint CEO 'Sprint CEO' Marcelo Claure". :)

3. NexusX

Posts: 613; Member since: May 16, 2013

the telecom industry is a race to the bottom. Tmobile is doing the same by practically giving out free data to attract subscribers. once the company attracts enough subscribers to hurt the bigger guys and gets bought out. ceo retires with a huge bonus. then it's back to industry consolidation and monopoly again. consumer beware

4. Slammer

Posts: 1515; Member since: Jun 03, 2010

Or, the overhead and cost of adding subscribers, will force T-Mobile to raise prices and eliminate some of the free stuff. John B.

9. lsutigers

Posts: 832; Member since: Mar 08, 2009

It sounds like the business model works, given Freedom Pops explosive growth domestically and internationally. The idea is that if you give users a bit for free, and they like the service, they will end up paying for additional voice / data.

5. Af1rPA

Posts: 712; Member since: Jun 12, 2014

If freedompop is already a MVNO of Sprint then why would Sprint buy them? Wouldnt freedompop already be paying Sprint for each tail?

8. lsutigers

Posts: 832; Member since: Mar 08, 2009

Freedom Pop has been growing like crazy which is why AT&T, T-Mobile and other firms have looked at acquiring them. They also inked international deals with other carriers to bring their service overseas. This sounds like a SoftBank investment channeled through Sprint.

13. kanagadeepan

Posts: 1264; Member since: Jan 24, 2012

Because, if others buy them it will hurt Sprint finally... To avoid others from buying, Sprint is forced to buy their own mvno...

10. jroc74

Posts: 6023; Member since: Dec 30, 2010

I just hope they dont change the premise of what they do. Its really affordable. They need more phones tho, dont know if you can just use a Sprint phone on FreedomPop. Woulda been nice to combine Boost with FreedomPop.

11. downphoenix

Posts: 3165; Member since: Jun 19, 2010

I recently signed up for FreedomPop, and it works fine, but be forewarned, it is not a smooth transition. First of all, porting in a number, accoridng to them, takes 3-7 business DAYS, not HOURS like virtually everyone else. Second, they cannot port my Sprint number at all. Third, text messages have to be sent/received via an app you download, and these texts can only be sent if you have data connection. Still undecided if Ill just accept my loss of my phone number and stick with them, it has worked fine otherwise for me.

12. downphoenix

Posts: 3165; Member since: Jun 19, 2010

Also there's the fact that it is not truly free (if you can't live without Voicemail). It is 2.50 a month for voicemail.

15. reckless562

Posts: 1153; Member since: Sep 09, 2013

you still use voicemail? for a business yea, but no 1 "needs" voicemail in the traditional sense. thats what data is for!!!

17. Kaiser2007

Posts: 173; Member since: Nov 16, 2013

You don't have to buy Voicemail if you don't want it. I'm using it without Voicemail and it's fine for me.

14. joe1blue

Posts: 169; Member since: Jul 25, 2013

Why can't Sprint just sit down and focus on fixing their network, it would be nice to see another phone company grow and get into the mix in the u.s.

16. -box-

Posts: 3991; Member since: Jan 04, 2012

How many MVNOs does sprint need? Boost (owned by sprint in full IIRC), Virgin, FP, and a few others... Sprint should spend those millions on improving ots terrible network and making commercials that aren't instant turn-offs like the "framily" ones and the one with the awful screeching girls who are way too excited about an already-outdated overpriced phone on a not-actually-unlimited "unlimited" plan.

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