Is the Mint acquisition another un-carrier stroke of marketing genius? — Greenblatt

Industry Voices - Greenblatt

T-Mobile’s recent announcement that it would acquire Mint Mobile and its associated brands for $1.35 billion received an outsized amount of media attention thanks to the star power of its celebrity owner, Ryan Reynolds. In the eyes of T-Mobile, that’s exactly the point.

Since the announcement, many analysts have weighed in with perspectives on what the deal really means. While some have astutely highlighted the growing competitive threat posed by mobile virtual network operators (MVNOs), others have predicted price increases, and everyone has been trying to figure out exactly how many subscribers Mint really has. But the real story — the real business rationale behind this big purchase can best be summarized in a video tweeted by Reynolds following the announcement in which he jokes with T-Mobile CEO Mike Sievert, “T-Mobile has assured me that our incredibly improvised and borderline reckless messaging strategy will also remain untouched.”

That messaging strategy, anchored by Reynolds’ charismatic delivery and comedically self-aware persona, is everything you need to know about the intrinsic value of Mint and the future of brand-building in the wireless space.

Mint by-the-numbers

It certainly wasn’t Mint’s core business model that bowled over T-Mobile execs. Mint’s service has, at best, been suboptimal. It does not have great margins, and its subscriber base represents the least loyal customer segment in the wireless industry: those who choose a carrier for price. In fact, according to J.D. Power data, 86% of Mint Mobile’s current customer base chose the carrier for price. On average, 10% of wireless customers who leave a carrier for price reasons end up leaving again the next year for an even lower-priced offer.

One area where Mint has excelled, however, is in customer care. Though it comes in second place among MVNOs in the J.D. Power 2023 U.S. Wireless Customer Care Study—Volume 1, Mint had a significantly higher overall satisfaction score than T-Mobile. It is also worth noting that Mint was second only to Consumer Cellular, which has absolutely set the standard for great wireless customer service by recognizing and catering to its core audience of older users. Mint, by contrast, performs particularly well with a younger demographic, thanks in large part to its low-price structure and its user-friendly mobile app.

New battle lines being drawn in wireless brand wars

Both attributes — the great customer service and the youth-friendly market position — become doubly important when paired with Reynolds and the T-Mobile brand identity. Together, they will become a cornerstone of the T-Mobile brand’s “un-carrier” strategy, helping it position itself versus rivals like Verizon and AT&T as an affable, accessible and relatable alternative.

Currently in J.D. Power’s wireless brand image evaluation, T-Mobile is perceived by consumers as being trustworthy and having a good reputation, while Verizon is perceived as being reliable and AT&T is perceived as being rigid and inflexible. The Reynolds tie-up will help T-Mobile further differentiate and lean into that funny, charming image, while also drawing on the strengths of its network to not just attract price-conscious and younger customers but keep them.

To put it simply, T-Mobile is getting something different in the Mint acquisition. In a world where many aspects of the wireless customer experience have become highly commoditized and homogenized, different is better.  

Will they be able to convert on this unique market position and brief turn in the spotlight to quickly win-over price-conscious customers and bring them into the T-Mobile fold long enough to justify the Mint valuation? That will ultimately come down to execution. T-Mobile should have learned a lot from its Sprint acquisition where slow migration and bungled tech transitions created a lousy and confusing experience for customers. They have the experience under their belts and the star power to get this one very right.

Surely, the rest of the industry — and its growing cadre of celebrity-endorsed MVNOs — will be watching it all very closely.

Ian Greenblatt is managing director of the Technology, Media and Telecommunications Intelligence practice at J.D. Power. With in-depth industry expertise, Ian drives market strategy across the rapidly converging landscape, which encompasses the entire communication sector. You can reach him by email at [email protected] and follow him on Twitter at @GreenblattTMT.