Verizon announces plans to acquire prepaid phone provider TracFone

Verizon Buying Trac Fone Wireless for Up to $6.9 Billion

Verizon announces plans to acquire prepaid phone provider TracFone

The acquisition will cost around $6.25 billion in equal parts cash and stock, plus 630 million in cash if certain goals are met. Tracfone led the pack, reporting 214,000 net additions for its prepaid services in the US during Q2, compared to 135,000 at AT&T and 12,000 at Verizon.

Tracfone, which serves about 21 million subscribers through more than 90,000 retail locations across the United States, said more than 13 million of its subscribers rely on Verizon's network under an existing agreement.

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.

Announced on Monday, the agreement with America Movil will see it transfer ownership of Tracfone over to Verizon, upon completion. TracFone is one of the leading prepaid phone providers in the U.S. and its acquisition is expected to help Verizon expand its portfolio into the value segment.

"This transaction is aligned with what we do best: providing reliable wireless service alongside a best-in-class customer experience", said Hans Vestberg, Chairman and CEO of Verizon.

Along with 4G LTE, Verizon intends to deliver 5G networks to Tracfone customers, as well as fixed wireless home broadband solutions. "This transaction firmly establishes Verizon, through the Tracfone brands, as the provider of choice in the value segment, which complements our clear leadership in the premium segment". "We are pursuing this important strategic acquisition from a position of strength given our very strong and prudent financial profile".

Verizon Communications (VZ) has phoned the executive team at Tracfone, and has inked a deal.

The mobile operator Tracfone isn't exactly a household name, but it does have about 21 million customers in the US. "Being connected is now more important than ever, and Tracfone customers will benefit from Verizon's innovations-both now and in the future".

Verizon expects to drive significant benefits and network synergies from the transaction.

The acquisition is anticipated to close in the second half of 2021, though it will still have to receive regulatory approval. And if you're keeping track of the investment banking league tables for some unusual reason, Credit Suisse acted as financial advisor to Verizon and Debevoise & Plimpton acted as its legal advisor.

Next two months to be tougher with more COVID-19 deaths
Elon Musk insults Bill Gates after Microsoft founder snubs Tesla