U.S. telecom carrier Sprint is reportedly in talks to purchase Puerto Rico’s wireless operator Open Mobile. The deal is likely to be closed by the end of March this year, according to reports in local media.
The deal certainly bolsters Sprint’s operations on the Caribbean island, helping the provider to increase revenue and reduce operational cost, largely because Open Mobile runs a high speed 4G telecom network.
Moreover, Open Mobile comes with Eligible Telecommunications Carrier (ETC) certification, an important authorization that paves the way for Sprint to serve poor Puerto Rican residents entitled to phone subsidies, known as Lifeline.
Under this scheme, poor residents will receive around $10 a month in financial assistance to go toward a telecom service.
But, analysts say, the merger is unlikely to make any major impact on the operations of leading carriers, including AT&T and Claro.
Founded in 2007, Open Mobile is a joint venture between Columbia Capital and M/C Venture Partners. Its business model is based on advance payment and unlimited local call services, which generated good revenue in its initial six months.
It was the first on the island to offer no-contract wireless services, a practice that was replicated by other competing carriers. Considering a report from local media, the operator is currently struggling to sign up more customers, with its revenue shrinking by the year.
There are six operators in Puerto Rico’s telecom market, but it lags well behind the mainland U.S. states in terms of affordable telecom services. The fundamental reason is the country is going through economic hardship, with many professionals leaving the island for the United States.