T-Mobile scoops up owner of Ryan Reynolds-backed Mint Mobile for US$1.35B

T-Mobile US Inc. said on Wednesday it would buy Ka'ena Corp, the owner of Ryan Reynolds-backed budget service provider Mint Mobile, for up to US$1.35 billion, as the telecom operator looks to maintain growth in a competitive market.

The deal will allow T-Mobile to tap a larger share of the pay-as-you-go customer base, whose numbers are expected to swell as credit-challenged people shy away from hefty monthly bills.

It will also provide a boost to T-Mobile's business at a time when promotions from rivals Verizon and AT&T have driven up its churn rate, which refers to the percentage of customers who stop using a service.

The agreement consists of 39% cash and 61% stock, with the final purchase price set to be decided by Ka'ena's performance during certain periods before and after the closing of the deal that is expected later this year.

The purchase will add slightly to T-Mobile's core adjusted earnings, but is not expected to affect its outlook for the year.

"Over the long term, we'll also benefit from applying the marketing formula Mint has become famous for across more parts of T-Mobile," said Mike Sievert, Chief Executive Officer of T-Mobile.

Mint is known for its marketing tactics that often feature part-owner Reynolds. At the onset of the pandemic in 2020, the "Deadpool" star left a voicemail for users informing them that the company had given them unlimited free data.

Reynolds' portfolio also includes British soccer club Wrexham and Aviation American Gin, which was sold to Diageo for about $610 million in 2020. The actor, however, maintains "ongoing ownership interest" in Aviation Gin.

(Reporting by Akash Sriram in Bengaluru; editing by Saumyadeb Chakrabarty and Uttaresh Venkateshwaran)