Current Sprint MVNO FreedomPop has seen exponential growth since launching in 2012 on the premise of free monthly data access for all. Now after two years that have seen its business grow to over 100,000 users and multiple product launches that include iPod sleeves, Android smartphones and hotspots, the company is close to being acquired, with two carriers now showing interest in the startup. The latest report from Bloomberg Businessweek pegs the acquisition cost in the nine figure range, with the company adding so many customers every quarter that it claims it will have 1 million customers by this time next year, which would mean a 50% increase in customers every quarter since its 2012 launch.
The company’s core product is currently free mobile phone service, which includes 500MB of data, 200 voice minutes and 500 texts per month either through dedicated smartphone hardware or carrier agnostic apps for Android and iOS. Voice and text services use FreedomPop’s VOIP calling and SIP messaging apps. The company earns much of its revenue from additional charges once the free voice and data allotments are used and premium add-on packages such as monthly rolling data access, visual voicemail and phone support for an additional fee.
To keep costs down, the company relies on refurbished smartphone inventory from its current carrier partner in Sprint, and features such products as a heavily modified Samsung Epic 4G Touch for $189 that claims to keep the owners calls and messages safe from surveillance and snooping. The company also recently launched support for the iPhone after years of teasing the phone’s availability on the service, beginning with the iPhone 5. With FreedomPop so heavily tied to Sprint and beginning discussions with a European and domestic GSM carrier to offer its services earlier this year, it stands to reason that Sprint would want to keep a fast growing brand for itself, though FreedomPop had always eyed expansion as a goal, particularly international expansion.
With its initial investors in Atomico, Mangrove Capital Partners, DCM and Square 1 Bank spending $16 million on FreedomPop, the nine-figure sum for the company also vindicates the business model, as much speculation surrounded FreedomPop’s viability in its first year of operation, particularly as it suffered delays in offering smartphones and its early products focused on mobile broadband before the explosion in tablet growth and its services were initially pitched as low-cost home and mobile broadband replacements.