Verizon Wireless, one of the leading American telecommunications firms, has reportedly inked an agreement with America Movil to acquire TracFone Wireless Inc. in a deal worth over USD 6 billion.
Tracfone is one of the leading resellers of wireless services in the United States, with over 21 million subscribers base, approximately 850 employees, and a network of over 90,000 retail locations. The company is owned by América Móvil and is also a longtime partner of Verizon.
Millions of Tracfone subscribers presently dependent on Verizon’s wireless. The company does not operate its physical network in the United States and instead rides on cellphone carriers’ systems for a particular fee.
Sources cite that the deal gives Verizon a greater foothold in the low-income and value wireless segment. The deal provides U.S consumers with low-cost wireless plants with improved services and enhanced experiences, including fixed wireless broadband solutions, expanded international voice calling, and roaming options.
Following the deal, Verizon will also bring improved access to its top-notch wireless network and a wide-ranging suite of mobility services and products to a new customer base. The company is likely to bring its cutting-edge 4G LTE and 5G network services and other technologies to Tracfone customer base, which would further improve Tracfone’s distribution channels, and strengthen Tracfone’s market opportunities.
The agreement will include USD 3.125 billion in cash and USD 3.125 billion in Verizon common stock. Tracfone would also receive an extra USD 650 million in cash payment depending on performance measures. The deal is expected to close in the last six months of 2021 and is subject to regulatory approval and customary closing conditions.
Speaking on the acquisition, Ronan Dunne, Executive Vice President, and Group CEO said that the deal firmly establishes Verizon, through Tracfone brands, as the preferred service provider in the value segment, which complements the company’s leadership in the premium segment.
Meanwhile, Debevoise & Plimpton served as legal advisor to Verizon while Credit Suisse served as financial advisor.
Source Credit - https://www.verizon.com/about/news/verizon-to-acquire-tracfone