June 7 (Reuters) - Prepaid wireless provider STS Media said on Friday it has agreed to sell its FreedomPop brand to Red Pocket Mobile, as STS readies itself to place a bid for Sprint Corp’s Boost Mobile.
Proceeds from the sale will be invested in the technology that had powered FreedomPop and will put STS in a better position to partner with other companies or private equity groups and aggressively pursue Boost, STS Chief Executive Stephen Stokols said.
Boost, which sells prepaid phone plans that allow customers to purchase service at the beginning of the month and do not require a credit check, is up for sale as U.S. wireless carriers T-Mobile US Inc and Sprint work to gain regulatory approval for their planned $26 billion merger by reducing their combined market share in the prepaid industry.
Stokols declined to comment on FreedomPop’s sale valuation. A source familiar with the deal said the transaction value is in the “high eight figures,” declining to be named because the terms are private.
STS said it is speaking with several private equity groups and at least one “facilities-based buyer,” on a partnership to buy Boost, though Stokols declined to name the potential partners.
“Facilities-based” in the telecommunications industry refers to a company that owns the physical infrastructure for a network, such as T-Mobile or Sprint. FreedomPop does not own wireless spectrum or towers, but currently piggybacks off of Sprint’s network.
The planned sale of Boost has drawn wide interest, including from Amazon.com Inc, which is considering Boost primarily because the sale would include a six-year contract that allows access to the combined T-Mobile and Sprint network, Reuters previously reported.
Other interested bidders include Boost Mobile’s original founder Peter Adderton, who has been on a public campaign to buy back Boost since the merger was announced, and prepaid wireless provider Q Link Wireless.
The Sprint and T-Mobile merger has received the green light from the Federal Communications Commission after the two carriers offered a series of concessions, including the sale of Boost. It still needs approval from the U.S. Department of Justice, which is reviewing the deal on antitrust grounds.
In a filing to the FCC, T-Mobile and Sprint said they would identify a buyer for Boost and submit the negotiated agreement to the FCC within 120 days of closing the merger.
Reporting by Sheila Dang in New York Editing by Leslie Adler