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Telecomm titan Telstra (ASX:TLS) has bought out Boost Mobile for AU$140 million after already sharing its network with the smaller player.
The move – first reported by the AFR – is perhaps fair to call unsurprising.
Behind every M&A story, which are often treated with keen interest due to the large sums of money they tend to involve, is really just a story of vulture and prey.
And in an economy where business insolvencies are still heightened after the pandemic and its discontents, Telstra has clearly seen a quick and easy way to expand its overall value offering.
(Consider that a $140M deal is a fairly small box of chips for Telstra, a stock which commands a capitalisation nearly $46B.)
And then one can ask whether or not this wouldn’t have happened anyway, regardless of macro – Boost Mobile, when Googled, advertises foremost its exposure to Telstra’s network.
Boost, for trivia’s sake, has an international footprint despite its Aus founder’s roots – the company was once tied up with Sprint, a U.S. telco, which ditched Boost in 2021.
Boost’s flagship product, or that which it’s most keen to advertise to any retail punters searching for the company, is prepaid mobile SIM plans.
One deal offers 265GB a year for $300 – which, compared to other telco products, isn’t exactly the world’s most compelling deal.
(At least in the eyes of this finance journalist who works from home and uses a hotspot for a modem – increasingly common, even as wireless routers long ago abandoned landline connectivity.)
Because Boost is private, there’s no way to publicly know for sure how its sales and revenue is going – but the very fact of a takeover deal is proof of a company perceiving more sense in letting Telstra take over than persisting down a path on its own.
Australian website Product Review could, perhaps, be useful in ascertaining what pushed Boost over the brink into Telstra’s arms – but across 1,550 reviews, Boost mobile’s overall five-star-rating is two stars.
According to Product Review, 73% of customer reviews of Boost products have been negative, with many users perceiving the SIM set-up process as burdensome.
Boost was also getting a payout from Telstra for every prepaid SIM recharge made (using its networks via Boost), but if Product Reviews are anything to go by, that might not be the world’s most lucrative commission deal.
Again, it’s hard to know – but with 1M reported users, it’s not hard to see why Telstra snatched up the company that’s thoroughly on its radar.
As of 2.50pm Sydney time on Monday, Telstra hadn’t issued an announcement to the market.
TLS last traded at $3.95/sh.
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