NEW YORK — Verizon announced Monday it has reached an agreement with America Movil to acquire Tracfone, the largest mobile virtual network operator (MVNO) in the United States, serving approximately 21 million subscribers.
Tracfone is a leading pre-paid and value mobile provider in the U.S. and a long-time partner of Verizon. Tracfone currently supports more than 13 million of its subscribers using Verizon’s wireless network through an existing wholesale agreement. (Ed note: With 120 million subscribers, Verizon is America’s largest carrier buying the country’s largest MVNO.) America Movil is owned by Mexican billionaire Carlos Slim.
The proposed acquisition of Tracfone is valued at US$6.25 billion, which includes US$3.125 billion in cash and US$3.125 billion in Verizon common stock, subject to customary adjustments, at closing, says the Verizon news release announcing the agreement. The deal also includes up to an additional US$650 million in future cash consideration related to the achievement of certain performance measures and other commercial arrangements, says the release.
The transaction is subject to regulatory approval and other closing conditions. Verizon says it expects the transaction to close in the second half of 2021.
Following the acquisition, Verizon expects to bring its 4G LTE and 5G networks and other technologies to Tracfone customers, further develop Tracfone’s distribution channels and expand Tracfone’s market opportunities, says the release. Currently, Tracfone serves its subscribers through a network of more than 90,000 retail locations across the U.S., including every Wal-Mart.
“Since its launch, Tracfone has developed strong consumer brands and has established itself as a clear leader in the value mobile segment. 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 of Verizon’s consumer group, in the release.
“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,” added Hans Vestberg, chairman and CEO of Verizon.
According to the news release, 850 Tracfone employees will join the Verizon team. Tracfone currently operates in the U.S. under a number of wireless brands, including Tracfone Wireless, Net10 Wireless, Walmart Family Mobile, SafeLink Wireless, Clearway Wireless, Total Wireless, Simple Mobile, Straight Talk Wireless and Page Plus Cellular. The company reported $8.1 billion in revenue in 2019.
