Verizon is officially announcing its plans to acquire Tracfone (from Mexican telecom company America Movil), the largest reseller of mobile service in the US for more than $6 billion between cash, common stock, and future cash. Among the Tracfone brands combined, there are about 21 million subscribers in the US (most of which are in the low-income segment) and the parent brand already connects 13 million subscribers to Verizon towers.
Tracfone services (and sometimes even devices) is(/are) sold at more than 90,000 retail locations in the US, including Walmart, Dollar General, CVS Pharmacy, Target, Family Dollar, and best Buy. There are several MVNO brands under Tracfone including Net10 Wireless, Walmart Family Mobile, SafeLink Wireless, Clearway, Total Wireless, Simple Mobile, Straight Talk Wireless, and PagePlus.
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. We are pursuing this important strategic acquisition from a position of strength given our very strong and prudent financial profile. – Hans Vestberg, Chairman and CEO of Verizon
With the acquisition, Verizon hopes to “further develop Tracfone’s distribution channels, and expand Tracfone’s market opportunities,” It also plans to add LTE and 5G connectivity to Tracfone subscribers and begin offering new services like wireless home broadband.
Verizon has always had a reputation for being the more expensive one among all major US service providers, but the carrier has always had a strong network to justify that. With the Tracfone acquisition, Verizon will diversify its offerings and be able to compete in the pre-paid segment where other carriers like Cricket and Metro are already widely successful.
The acquisition still needs to be approved by US regulators, but Verizon expects for the deal to be closed in H2 of 2021.