Verizon will acquire pre-paid and value mobile provider Tracfone from parent company America Movil, according to a statement released today by Verizon.
This is M&A deal 369 that ChannelE2E has covered so far in 2020. See the full M&A deal list here.
Tracfone is the largest reseller of wireless services in the U.S., serving approximately 21 million subscribers through a network of over 90,000 retail locations nationwide. Tracfone has approximately 850 employees, according to the statement.
Verizon and Tracfone are long-time partners; more than 13 million Tracfone subscribers currently use Verizon’s wireless network through an existing wholesale agreement, the company said in the statement.
The acquisition expands Verizon’s portfolio into the value segment, opening up a new customer base for its wireless network and mobility products, according to the statement.
Verizon will pay $3.125 billion in cash and $3.125 billion in Verizon common stock. The agreement also includes up to an additional $650 million in future cash consideration based on achievement of certain performance measures and other commercial arrangements, Verizon said in the statement.
Verizon expects the transaction to close in the second half of 2021.
Verizon Acquires Pre-paid Mobile Provider Tracfone
Following the acquisition, Verizon says it will bring its 4G LTE and 5G networks to Tracfone customers, further develop Tracfone’s distribution channels, and expand Tracfone’s market opportunities, according to the statement.
The acquisition aligns with Verizon’s Network as a Service strategy, and will provide value wireless customers with enhanced services, including fixed wireless residential broadband solutions, 5G access and expanded international calling and roaming options, Verizon said in the statement.
Verizon will continue to offer Lifeline service through Tracfone and further develop its core brands, products and distribution channels, including StraightTalk, the vast majority of whose customers operate on the Verizon network today, according to the statement.
Verizon Acquires Tracfone: Executive Insights
“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. “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.”
“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,” said Ronan Dunne, executive vice president and group CEO, Verizon Consumer Group, in the statement. “We’re looking forward to welcoming all of Tracfone’s customers and each of Tracfone’s nearly 850 valuable employees. We are excited to expand our relationship with Tracfone’s distribution partners, and when Tracfone’s customers become part of our family, they will get the best of both worlds – more choices, better services, and new features thanks to Verizon’s investment – but with the flexibility and control that they have come to value with its prepaid plans,” Dunne said.