Business

Verizon to buy Tracfone, U.S. unit of Mexican telecom giant América Móvil

The deal to buy the wireless services provider was valued at $6.25 billion, involving both cash and stock

REUTERS/Sergio Perez
  • The U.S. wireless industry will become even more concentrated in the hands of three mobile carriers: T-Mobile, Verizon and AT&T;
  • Tracfone serves about 21 million subscribers through more than 90,000 retail locations across United States.

Verizon announced it would buy wireless services provider Tracfone, a unit of Mexican telecom América Móvil, in a $6.25 billion cash and stock deal.

Tracfone, which serves about 21 million subscribers through more than 90,000 retail locations across United States, said over 13 million of its subscribers rely on Verizon’s network under an existing agreement. Verizon is the largest U.S. wireless carrier by subscribers.

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The U.S. wireless industry is concentrated in the hands of three mobile carriers due to several merger deals in recent years, T-Mobile that in April completed its $23 billion merger with Sprint to solidify its position in the United States, Verizon and AT&T.

América Mévil, which was created from a state monopoly, is Mexico’s largest telecoms operator by far and is controlled by the family of Mexican billionaire Carlos Slim, the Latin American nation’s richest man.

Tracfone had become popular with the lower end of the ultra-competitive U.S. telecoms consumer market and Verizon now plans to provide new products into that segment after this “strategic acquisition,” said Hans Vestberg, chairman and chief executive of Verizon.

“This transaction firmly establishes Verizon, through the Tracfone brands, as the provider of choice in the value segment, which complements our clear leadership in the premium segment,” added Ronan Dunne, executive vice president and group CEO, Verizon Consumer Group.

Shares of Verizon, the largest U.S. wireless carrier by subscribers, were up more than 1% in premarket trading.

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The deal would include $3.125 billion in cash and $3.125 billion in Verizon stock. Credit Suisse is acting as financial adviser to Verizon on the deal that is expected to close in the second half of 2021

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