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Does Amazon’s Interest in Boost Mobile Make Sense?

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Jun. 4 2019, Updated 10:18 a.m. ET

Amazon and Boost Mobile

Amazon (AMZN) has reportedly shown interest in buying Boost Mobile from T-Mobile (TMUS) and Sprint (S). Boost Mobile is Sprint’s prepaid wireless service brand. Although the specific details aren’t known, Boost Mobile could sell for up to $3 billion, according to what potential bidders told Reuters. The buyer would be scrutinized by the Department of Justice to ensure that the deal is viable and preserves competition.

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T-Mobile and Sprint wanted to sell Boost Mobile to reduce their market share in the prepaid wireless market. The companies want to attain approval from the U.S. Federal Communications Commission for their $26.5 billion merger. Sprint had ~8.8 million prepaid customers in the fourth quarter of fiscal 2018—the quarter ending on March 31. T-Mobile has a prepaid customer base of ~21.1 million.

Amazon’s expansion in different markets

Amazon has been exploring new ventures. The company has entered many areas to generate revenues and profits. Amazon has expanded in sports programming, health care, investing in original content for making TV shows, and smart home services.

Amazon has also gained experience in offering phone calls through its Echo Connect product. Amazon allows Alexa-enabled voice offering to make phone calls. Purchasing Boost Mobile would allow Amazon to use T-Mobile’s wireless service for at least six years. According to Reuters, Amazon might buy Sprint and T-Mobile’s wireless spectrum if they divest it.

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