Verizon buys America Movil MVNO Tracfone for USD 6.25 billion

Verizon has agreed to buy Tracfone, a MVNO in the US owned by Mexico’s America Movil, for USD 6.25 billion. 

Under the agreement, Verizon will pay USD 3.125 billion in cash and USD 3.125 billion in Verizon shares, subject to customary adjustments at closing. The deal also includes up to USD 650 million more if the operations achieve certain performance measures and other commercial arrangements. Verizon expects the deal will bring in significant benefits and network synergies and that it will be accretive in the first full year after close, excluding transaction and integration costs. The company does not expect the acquisition to materially impact capex. 

Verizon explained that Tracfone is the largest reseller of mobile services in the US, serving 21 million subscribers through a network of over 90,000 retail locations nationwide. The company already provides network services to Tracfone, and more than 13 million Tracfone subscribers rely on Verizon’s mobile network through the wholesale agreement. 

Following the acquisition, Verizon will bring its LTE and 5G networks to Tracfone customers, further develop Tracfone’s distribution channels, and expand Tracfone’s market opportunities. For Verizon, the deal is in line with its growth oriented Network as a Service strategy, and will provide better and more services to US consumers looking for value mobile plans, including fixed wireless residential broadband services, 5G access and expanded international calling and roaming options. Verizon added that Tracfone’s portfolio will in general help Verizon support value and low income segments. The US company will continue to provide Lifeline services through Tracfone and further develop its core brands, products and distribution channels, including StraightTalk, most of whose customers already operate on the Verizon network. 

Verizon will take on board all of Tracfone’s customers and 850 employees in the acquisition, which should close in the second half of next year.