The founder of pre-paid wireless carrier Boost Mobile says the outfit’s soon-to-be new owners are planning a major restructuring of the company that could leave as many as 2.5 million of its 9.3 million customers out in the cold.
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Peter Adderton founded Boost in 2000 and sold it in 2003 to Nextel Communications before it was acquired by Sprint Corp in 2005. Boost will be sold to Dish Network as part of the T-Mobile-Sprint divestitures necessary to gain approval from the Department of Justice’s Antitrust Division and the Federal Communications Commission.
But Adderton says if Dish does, in fact, acquire Boost — a wireless telecommunications brand that focuses on low-income customers — Dish will launch major cost-cutting efforts as it focuses on building out super-fast 5G wireless technology and becoming a fourth wireless network.
Adderton tells FOX Business that one way Dish plans to cut costs is to shed a big chunk of its prepaid customers — about 2.5 million people they don’t expect to make money on.
A spokeswoman for Sprint, in a statement, denied that they're winding down Boost. "DISH plans to aggressively grow the Boost business from day one. Upon close, we are eager to provide existing and future Boost consumers with our award-winning customer service. Any speculation to the contrary is false and is reflective of some other agenda."
Adderton, in response, balked. "That sounds good but what does it actually mean? Boost consumers deserve more than soundbites." Adderton discussed what he believes will be Dish’s approach to Boost in an interview with FOX Business' Charlie Gasparino and Liz Claman on Wednesday.
The move — if it does materialize — is likely to generate interest among regulators, namely the state attorneys general filing a lawsuit in opposition to the $26 billion T-Mobile-Sprint deal that they believe will lead to higher wireless prices, particularly for low-income customers.
The merger gained DOJ and FCC approval after both companies agreed to a number of conditions including keeping prices stable for three years, allowing Dish to access T-Mobile’s network and retail stores, and building out a 5G network in rural areas.
As part of the deal, T-Mobile and Sprint agreed to unload spectrum to Charlie Ergen's Dish so he could build out a fourth wireless carrier and keep market conditions competitive. Another divestiture was selling Boost — a major prepaid company that offers cheaper service and targets customers on a budget.
But Adderton says T-Mobile and Sprint's consent decree that paved the way for the merger's approval will not stop Dish from cutting the quality of its prepaid services. Adderton says that Dish plans to "throttle," or slow down, services to certain prepaid customers which it hopes will result in them leaving the network.
Serving low-income customers is a major concern of federal regulators in their approval of the deal. People close to the state AGs tell FOX Business, the centerpiece of their lawsuit against the merger is that Dish will not be a viable competitor in the wireless space. If Dish is looking to rid their network of the very customers they're supposed to protect, it would bolster the AG's case.
T. Mobile's flashy CEO John Legere recently tweeted he will make an announcement on Thursday concerning the merger. People tell FOX Business that they expect the announcement will strengthen T-Mobile's service to prepaid customers. Whether this will assuage the state AGs is unclear as the Dec. 9 trial date looms.
FCC, DOJ and New York Attorney General Letitia James did not respond to request for comment.