Verizon has entered into an agreement to acquire pre-paid mobile phone provider Tracfone in a deal worth more than $6.25 billion. The deal will include $3.125 billion in cash and $3.125 billion in Verizon common stock. Additionally, the agreement includes up to $650 million in future cash consideration related to performance measures. Verizon expects the deal to close in the second half of 2021.
Tracfone is owned by Mexico City-based América Móvil. It is the largest Mexican telecommunications company. Along with the Tracfone Wireless, América Móvil also operates several other brands in the US. Tracfone currently employs around 850 people stateside.
“We are excited about the opportunity to bring Tracfone and its brands into the Verizon family where we can put the full support of Verizon behind this business and provide exciting and compelling products into this attractive segment of the market,” said Hans Vestberg, Chairman and CEO of Verizon. “Being connected is now more important than ever, and Tracfone customers will benefit from Verizon’s innovations – both now and in the future.”
Verizon reaches agreement to acquire Tracfone
Tracfone is a no-contract, prepaid mobile phone service provider. It is the largest reseller of wireless services in the US. The firm has around 21 million subscribers under its belt and operates through a network of over 90,000 retail locations nationwide. You can find Tracfone retail locations at stores like Target, Best Buy, and CVS.
Since Tracfone is a mobile network virtual operator (MNVO), it doesn’t run its own physical network. Instead, the company offers its services over other wireless carriers’ systems for a fee. Verizon has been one of its partners, and the largest of them all. More than 13 million Tracfone subscribers currently rely on Verizon’s wireless network.
This acquisition will help Verizon expand its portfolio into the value segment. Following the acquisition, the largest American wireless provider plans to bring its 4G LTE and 5G networks to Tracfone customers as well. The company will also develop Tracfone’s distribution channel to bring its services to more people.
Tracfone offers a variety of services under its brand. Those include the Lifeline service, which offers free phones and free monthly minutes to qualifying customers, and StraightTalk, which offers prepaid, no-contract phone plans. Verizon says the company will continue to offer these services after the acquisition as well.
Tracfone is the second major MVNO to switch ownership this year. Following Sprint’s merger with T-Mobile earlier this year, the new T-Mobile handed over the Boost Mobile brand to Dish. The company completed the $1.4 billion acquisition in early July.