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

Ruben Fields
September 15, 2020

Soon, those customers will fall under the Verizon umbrella, as Verizon just announced it is purchasing Tracfone from its owner America Movil.

If you weren't aware, Tracfone serves a ton of people - it's the largest reseller of wireless services in the USA, serving about 21 million customers through a network of over 90,000 retail locations. New Street telecom analyst Jonathan Chaplin says that if Verizon were to move Tracfone's 8 million subscribers to its own networks, the carrier could save $800 million annually.

The acquisition of Tracfone aligns with Verizon's growth oriented Network as a Service strategy, and will provide more USA consumers seeking value wireless plans with improved experiences and enhanced services, including fixed wireless residential broadband solutions, 5G access and expanded global calling and roaming options. In addition, another $650 million could be paid out to America Movil depending on whether Tracfone achieves certain performance goals.

The US wireless industry is concentrated in the hands of three mobile carriers due to several merger deals in recent years: T-Mobile, which in April completed its $23 billion (roughly Rs. 1,69,032 crores) merger with Sprint to solidify its position in the United States, AT&T, and Verizon.

Verizon, the country's largest phone company, is buying prepaid phone seller Tracfone for up to $6.9 billion, expanding its low-income customer business. Verizon will also keep offering Lifeline services and further develop core brands like StraightTalk and distribution channels.

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Some more information about the leading MVNO in the U.S.

Talking about the uptick in prepaid at the time, Wave7 Research pointed to Straight Talk as an early victor in a positive prepaid surge, having gained 361,000 subs in the first half of 2020. "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".

"Since its launch, Tracfone has developed strong consumer brands and has established itself as a clear leader in the value mobile segment", said Ronan Dunne, EVP and group CEO of Verizon's Consumer segment, in a statement.

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.

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