What you need to know
- Verizon Wireless has reached a deal to purchase wireless re-seller Tracfone.
- It includes $3.125 billion in cash, $3.125 billion in Verizon stock, and up to another $650 in cash.
- Tracfone is the largest pre-paid wireless brand, touting 21 million subscribers.
Another big shift is taking place in the wireless space, with Verizon making the formal announcement on September 13 that it's now entered an agreement to purchase Tracfone.
There's a good chance you've heard of Tracfone before, and you might even use the company's services yourself. It's the largest wireless re-seller in the United States, offering affordable wireless plans through the main Tracfone brand and smaller sister brands — including Straight Talk, Simple Mobile, Total Wireless, Walmart FamilyMobile, and others.
Verizon is buying Tracfone for around $7 billion, with that being broken up into three main parts:
- $3.125 billion in cash.
- $3.125 billion in Verizon common stock.
- $650 million in "future cash consideration related to the achievement of certain performance measures and other commercial arrangements."
Commenting on the news, Verizon Chairman and CEO Hans Vestberg 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.
Of the 21 million Tracfone customers, more than 13 million of them already have their service powered by Verizon's network. It's said that all Tracfone customers will have access to Verizon service "soon," though it remains unclear if Tracfone's other service options from AT&T and T-Mobile will continue to be available. Verizon will also expand its, 4G LTE and 5G services, in addition to "other innovative technologies."
The deal is expected to be completed in the second half of 2021, pending regulatory approvals. We all know how long it took for the T-Mobile and Sprint merger to happen, and while this isn't exactly the same type of acquisition, it's still possible it'll be faced with pushback and delays along the way.
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