Sprint Buys Stake in Tidal Music Service to Bolster Popularity

January 23, 2017, 3:00 PM UTC

Mobile phone carrier Sprint is buying 33% of pop star Jay Z’s Tidal and will offer the service to its 45 million subscribers, giving the also-ran music company a potentially huge lift in its battle against Apple Music, Spotify and other contenders.

For Sprint, the fourth-largest wireless carrier, the move could add momentum and keep it from falling farther behind rival T-Mobile in the fight for mobile customers. The purchase aligns Sprint’s strategy more closely with larger carriers AT&T (T) and Verizon (VZ), which have invested in their own mobile content plays, while T-Mobile (TMUS) has not.

Sprint (S) declined to disclose how much it paid for the 33% stake. Billboard reported the deal was for $200 million, citing an anonymous source, valuing Tidal at $600 million.

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Sprint CEO Marcelo Claure also will join the board of Tidal, which launched in 2015 as a service that would be owned by artists and pay higher royalties than Spotify. Claure, a successful entrepreneur who sold his phone trading company Brightstar to SoftBank for $1.3 billion before taking the top job at Sprint, adds his considerable business acumen to Tidal’s strong artistic lineup.

Apple, which launched its music service in June 2015, got a huge boost by including its app on every iPhone and iPad. Sprint could give Tidal a similar, if somewhat smaller boost by marketing the service to its customer base.

Sprint said Tidal, which has made it name with exclusive initial releases from artists including Beyonce and Kanye West, will add exclusives that will only be available to Sprint customers. But the partners did not announce pricing or any promotional deals, saying that news would be “unveiled soon.”

Tidal last year said it had hit 3 million subscribers after 12 months in operation, trailing far behind Spotify’s 40 million paying subscribers through September and Apple’s (AAPL) 20 million subscriber base as of last month. An investigation published last week by Norwegian business daily Dagens Næringsliv alleged that Tidal had overstated its subscriber numbers and had closer to 1.2 million paying users.

Claure has been trying to drag Sprint out of a tailspin that saw it drop to last place among the major wireless carriers. Momentum has been building lately, as Sprint added five times more regular monthly phone customers last quarter than in the same period of 2015 and dramatically improved its cash flow.

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