Wireless carrier Sprint is reportedly in the final stages of acquiring competitor Open Mobile in what would be the first major change in Puerto Rico’s telecommunications landscape this year, two sources confirmed to this media outlet.
The transaction would be cashless, likely involving a share offering from Sprint to Open Mobile’s owners. It is expected to close later this month, the sources confirmed.
The sources said this deal makes sense for several reasons, including the fact that it would create a more robust network for Sprint, as it would be able to integrate Open Mobile’s CDMA/LTE technology into its operation.
“Sprint is essentially buying frequency and signal to add to its network,” said one of the sources that spoke under the condition of anonymity.
Open Mobile has been doing business in Puerto Rico since 2007, when M/C Venture Partners and Columbia Capital acquired the former MoviStar carrier for $160 million. Since then, the company made significant investments and carved a niche for itself as the first provider to offer no-contract wireless services, a practice that was replicated by other competing carriers.
However, sources confirmed Open Mobile has been struggling in recent years, with a drop in revenues and viability. Despite operational inefficiencies, the carrier is certified as an Eligible Telecommunications Carrier authorized to sell to the market that qualifies for Lifeline subsidies, which is an attractive asset for Sprint.
At present, Sprint is not ETC certified in Puerto Rico, so picking up Open Mobile would mean adding that segment of the population to its client roster, the sources said.
Lifeline is a segment that has been showing growth in Puerto Rico’s otherwise stagnating wireless market, partly in response to the island’s protracted economic crisis. The island has some 3.1 million active wireless lines.
Attempts to reach the general managers at both Sprint and Open Mobile were unsuccessful Tuesday. So, it remains unclear if the transaction will represent the end of the Open Mobile brand on the island, or if it will remain as a subsidiary or existing brand for certain products and services.
Sprint and Open Mobile compete against Claro de Puerto Rico, AT&T and T-Mobile.