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Home - , , - Verizon Wireless Expresses Plans to Purchase Tracfone in $6.25 Billion Deal

Verizon Wireless Expresses Plans to Purchase Tracfone in $6.25 Billion Deal

Verizon Wireless, today, made headlines as it announced its plans to expand its business into the prepaid sector. And how are they doing that? By buying Tracfone, a mobile operator that is considered as the largest MVNO in the country. Even though Tracfone isn't a household name, it has around 21 million customers in the country. 

Earlier today, Verizon announced that it will be buying Tracfone from its parent company, America Movil. In turn, Tracfone has several brands that operate under it including Straight Talk, Net10 Wireless, and Simple Mobile. It also has a large retail presence in more than 90,000 physical stores of brands like Best Buy, Target, and CVS. Tracfone's 850 employees will also be joining Verizon as part of the acquisition. 

According to reports, Verizon will be paying $6.25 billion for the acquisition. Half of that amount (or $3.125 billion) will be paid in cash, while the remaining half will be paid in Verizon common stock. An additional $650 million cash will be tied to the achievement of certain performance metrics. 

As of this writing, there is little we know about how the acquisition will change things for Tracfone. But Verizon says that it has plans to "further develop" the "core brands, products, and distribution channels" owned by Tracfone. In addition to this, Verizon plans to continue offering the MVNO's Lifeline service, which would allow qualified customers to get a free phone and minutes every month. 

The acquisition is expected to be finalized in the second half of 2021. 


Source: Verizon


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14 comments:

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  1. This is an interesting move. I am guessing that it is in response to AT&T and T-Mobile owning an MVNO. I would expect Tracfone to slim down its offerings to a single name and discontinue service on all but VZW.

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  2. What VZW/TF gonna do with Tracfone-owned Walmart Family Mobile powered by (T-Mobile) customers. Walmart is in the middle of this.

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    1. Probably offer a discount incentive to move customers away from the brand as they shut it down. That would be my guess.

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    1. If this does not get blocked it spells the end for MVNO's.

      The first insult was the T-Mobile/Sprint merger, which raises prices for consumers and MVNO's.

      The second and possibly greater insult is this Verizon purchase which puts the remaining MVNO market on life support.

      The third and final insult is the likely event that Dish does not build a viable fourth network.

      All the pieces are falling into place for much higher prices for US consumers.

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  4. I do fully agree with Peter Adderton’s (Founder Director and Executive Chairman of the first and Original Boost Mobile Australia / Founder Boost Mobile America) assessment on this merger or buyout as he states “ Want to be clear I am excited that @Verizon want's to begin to take prepaid consumers seriously this is great for the prepaid market as a whole, what I am less excited about is that we are losing yet another large carrier owned independent company @Tracfone to one of the big 3” in his twitter handle.

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  5. I do fully agree with Peter Adderton’s (Founder Director and Executive Chairman of the first and Original Boost Mobile Australia / Founder Boost Mobile America) assessment on this merger or buyout as he states “ Want to be clear I am excited that @Verizon want's to begin to take prepaid consumers seriously this is great for the prepaid market as a whole, what I am less excited about is that we are losing yet another large carrier owned independent company @Tracfone to one of the big 3” in his twitter handle.

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    1. I think Adderton is wrong. This acquisition getting blocked is the only thing that excites me.

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  6. 850 TracFone employees are now very nervous...Verizon wants the customers and the end to the competition...they dont want more employees long term with constant Verizon lay offs of their own employees esp call center workers who used to be in the USA but now Verizon outsources to bad accent workers in Asia and India......

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    1. Verizon's customer support is outsourced to two call centers: one in Cebu and the other in Milan in the Philippines. Both have come a long way in quality. Tracfone's IT systems are notoriously poor which causes service quality issues for its customers. Verizon's acquisition would improve service quality for Tracfone's customers. It's one of the few times that I advocate for an acquisition. TracFone under the direction of Verizon would be a huge improvement.

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  7. The big question here is will the current tracfone plan prices change? Prices are attractive to those not using a bunch of minutes/texts... and the newer monthly plans are ok also. Really hoping we don't see prices going in the direction of Verizon prepaid!

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    1. Of course they will. They want to eliminate those annual paygo plans. Just look what T-Mobile did with its paygo plan, yeah, its gone now. They want to get everybody paying monthly. This acquisition is perfect for that. They now control the largest former MVNO, so no more MVNO to compete with. No more mega MVNO to drive down wholesale rates, and no more mega MVNO to write low cost annual paygo plans. How does anyone not see this?

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  8. @Matt: I think you mean Manila, right?

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