Verizon announces plans to acquire prepaid phone provider TracFone
US telecom giant Verizon has entered an agreement with Mexico’s América Móvil to acquire its US-based subsidiary TracFone. TracFone is one of the leading prepaid phone providers in the US and its acquisition is expected to help Verizon expand its portfolio into the value segment. For the unaware, TracFone has been a longtime partner of Verizon, with more than 13 million TracFone subscribers relying on Verizon’s wireless network through an existing wholesale agreement. Following the acquisition, Verizon aims to bring its 4G LTE and 5G networks to TracFone customers, develop its distribution channels, and expand its market opportunities.
As per a press release on Verizon’s website, the “consideration for the transaction will include $3.125 billion in cash and $3.125 billion in Verizon common stock, subject to customary adjustments, at closing.” Additionally, the agreement includes up to $650 million in future cash consideration based on certain predefined performance measures and other arrangements.
In a statement regarding the acquisition, Hans Vestberg, Chairman and CEO of Verizon, said, “This transaction is aligned with what we do best: providing reliable wireless service alongside a best-in-class customer experience…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.”
The acquisition is subject to receipt of regulatory approvals and other customary closing conditions. Verizon expects the transaction to close in the second half of 2021.
Via: Yahoo Finance