Boost Mobile: Can "Field of Dreams" Strategy Succeed in the Wireless Market?
This analysis examines the current state of Boost Mobile, its position in the US wireless market, and its prospects for future growth. The company faces significant challenges despite having a new 5G network.
Background: The FCC’s Mandate and Boost’s Origins
- Sprint’s Acquisition: Following the acquisition of Sprint by T-Mobile in April 2020, the FCC imposed specific conditions to ensure continued competition in the wireless market.
- Finding a Replacement: A key condition was finding a replacement for Sprint to act as the fourth major US wireless provider.
- Boost Mobile as the Answer: The FCC designated Boost Mobile to fill this role, making it the fourth major player.
- DISH Network’s Role: DISH Network took control of Boost Mobile from Sprint in 2020.
- EchoStar Acquisition: EchoStar purchased DISH in late 2023.
The "Build It and They Will Come" Strategy and Its Shortcomings
- FCC’s "Field of Dreams" Analogy: The FCC’s strategy appears to mirror the movie "Field of Dreams," hoping that by building a wireless network, customers would flock to it, creating a successful business.
- Wireless Market Realities: Analyst Roger Entner of Recon Analytics points out that this "Build it and they will come" [strategy] is not enough in wireless."
- Lack of Scale: Entner emphasizes that wireless is a scale business, and Boost lacks the necessary scale to be a viable competitor.
Subscriber Losses and Unmet Growth Projections
- EchoStar’s Financial Concerns: Despite initially removing warnings about its ability to operate as a "going concern," concerns remain given Boost’s subscriber trends.
- Subscriber Declines: Boost Mobile is experiencing subscriber losses.
- DISH’s Ambitious Projections: In 2022, DISH projected significant subscriber growth, aiming to increase its mobile customer base from 8 million to 30-40 million.
- Falling Short: In the most recent quarter, EchoStar lost an additional 300,000 mobile customers, leaving it with fewer than 7 million subscribers. Even with these low numbers, that’s two million fewer subscribers than when EchoStar entered the market in 2010.
- Contrast with Competitors: While Boost is losing subscribers, competitors like Verizon, AT&T, and especially T-Mobile, are growing their subscriber bases.
Industry Growth and Boost’s 2025 Strategy
- Overall Market Growth: Despite Boost’s challenges, the US mobile market is booming. Analyst Chetan Sharma notes unprecedented growth.
- Blurring Prepaid/Postpaid Lines: Boost Mobile plans to blur the lines between prepaid and postpaid services in 2025. The plan is to give customers new choices for device financing and month-to-month plans
- Targeting Major Markets: the company’s senior VP stated that Boost is heavily advertising in major cities like New York City, hoping to prove itself to be reliable.
Network and New Opportunities
- Standalone 5G Network: Boost Mobile has built its own standalone (SA) 5G network.
- Faster Data Speeds: It has the benefit of delivering higher capacity, faster data speeds, and lower latency.
- Extensive Coverage: The network covers 80% of the US population, equivalent to 270 million people.
- Cost Efficiency: Sean Lee says that Boost hopes to pass the savings down to consumers.
- Analyst Optimism: The future looks bright for Boost. An analyst from Wave7 Research predicts the company will have more opportunity to compete in 2025.