Verizon is going to buy Tracfone - yes, Tracfone still exists

Yolanda Curtis
September 15, 2020

Verizon is increasing its customer base by pushing into the low-income cellular market, by announcing an acquisition of major virtual mobile network Tracfone for more than $6 billion.

Tracfone, as the largest wireless reseller in the US with prepaid brands including Straight Talk, has around 21 million subscribers.

Tracfone, a subsidiary of Mexico telecom giant America Movil, is a mobile reseller, the largest in the U.S. It doesn't build its own network, instead paying companies like Verizon, AT&T and T-Mobile a fee to use theirs.

Once the deal closes, Verizon says that it will bring its 4G and 5G networks and other innovations to Tracfone customers.

That said, it's not clear how Tracfone will operate once the Verizon deal is finished. Approximately 850 employees will also be moving over to Verizon as part of the purchase. Its other brands include Total Wireless, Simple Mobile, and Walmart Family Mobile. "We are pursuing this important strategic acquisition from a position of strength given our very strong and prudent financial profile".

"We're looking forward to welcoming all of Tracfone's customers and each of Tracfone's almost 850 valuable employees".

The acquisition expands Verizon's portfolio into the value segment, enhancing its wireless network and comprehensive suite of mobility products and services to a new customer base.

While postpaid customers are usually seen as the main prize, Fierce reported in late July that prepaid had somewhat of a resurgence in the second quarter as consumers turned to more affordable choices. It's said that all Tracfone customers will have access to Verizon service "soon", though it remains unclear if Tracfone's other service options from AT&T and T-Mobile will continue to be available.

Ronan Dunne, Executive Vice President and Group CEO, Verizon Consumer Group added: "Since its launch, Tracfone has developed strong consumer brands and has established itself as a clear leader in the value mobile segment". In addition, another $650 million could be paid out to America Movil depending on whether Tracfone achieves certain performance goals.

The acquisition to drive significant benefits and network synergies and to be accretive in the first full year following closing, excluding transaction and integration costs, and will have immaterial impact on capital expenditures.

As per a press release on Verizon's website, the "consideration for the transaction will include $3.125 billion in cash and $3.125 billion in Verizon common stock, subject to customary adjustments, at closing".

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