- Amazon may be interested in acquiring prepaid wireless service Boost Mobile from T-Mobile US and Sprint as the U.S. carriers seek regulatory approval on a planned $26 billion merger, Reuters exclusively reported. Amazon is interested in buying the brand to gain access to T-Mobile's network for at least six years, although Amazon has not commented on the reports.
- Amazon is also interested in buying wireless spectrum that the merged companies may need to divest, a source told Reuters. Such acquisitions may give Amazon a platform for wireless-powered services like drone deliveries of packages and driverless vehicles, analysts at investment research firm Moffett Nathanson said in a report that criticized the possible deal.
- Boost may be able to draw an acquisition bid of as much as $3 billion, potential bidders told Reuters. If wireless spectrum is included in the sale, Boost may fetch as much as $4.5 billion, per estimates by investment bank Cowen.
With the proposed Sprint, T-Mobile merger inching closer to reality, Amazon's possible motivation for buying Boost Mobile isn't clear beyond speculation that the e-commerce giant would gain access to wireless spectrum, which is used to transmit data, voice calls and video across the country. The wireless business is capital-intensive, requiring billions of dollars in investment to upgrade and maintain cellular networks, and Amazon may be better off relying on existing carriers to power next-generation services such as drone delivery and driverless vehicles, per the Moffett Nathanson analysis.
Amazon has had a mixed history in the wireless industry, most notably with its Fire Phone that failed to gain consumer acceptance. Whether the company could package Boost Mobile service in with other services, like Amazon Prime that charges about $120 a month for no-fee delivery and video and music streaming, also is an open question. Despite flops like the Fire Phone, Amazon has had notable successes such as its line of Echo smart speakers, a category Amazon leads in, and has fared well in other tech areas, like its fast-growing cloud-computing business, Amazon Web Services. But cloud computing doesn't require the same level of investment as a wireless network to sustain service.
Buying a cellular network also would expose Amazon to greater government scrutiny at at time when political leaders are scrutinizing the power of big tech companies in the U.S. economy. Democratic presidential candidate Elizabeth Warren (D-Massachusetts) called for the breakup of big tech companies this year, and President Donald Trump has accused Amazon of avoiding taxes, destroying jobs and abusing the U.S. Postal Service.