Verizon to Buy TracFone in Deal Valued at Up to $7 Billion

Verizon agreed to buy TracFone, a provider of wireless prepaid services, in a deal worth up to $7 billion in cash and stock, further consolidating the US cellular market. TracFone, a unit of Mexico’s América Móvil SAB, has about 21 million prepaid customers in the US under its namesake brand as well as StraightTalk and Net10. The company doesn’t run its own physical network in the US and instead rides on other cellphone carriers’ systems for a fee and then resells service under its own brands. The move plunges Verizon deep into the prepaid market, a sector it has largely avoided by catering to more lucrative customers who pay for wireless service after it is rendered. Customers on prepaid plans tend to switch providers more often, which operators consider a risk. Verizon is the biggest US provider with about 120 million connections, but it has been competing in a mature market that is now dominated by three providers. TracFone, backed by Mexican billionaire Carlos Slim Helu, grew into the biggest US cellphone reseller by catering to frugal customers through Walmart stores and other independent dealers. Its StraightTalk service offers data plans for as little as $34 a month. TracFone offers service for as little as $15 a month with limits on internet data as well as the number of texts and phone calls.

The deal is subject to approval from antitrust and telecom regulators. Federal competition enforcers have traditionally viewed virtual-network operators like TracFone as resellers of wholesale network capacity owned by companies like Verizon that own the cell-tower equipment and lines that carry their traffic, so the deal is unlikely to attract as much scrutiny as T-Mobile’s Sprint takeover did when it was announced in 2018. Verizon said it expects its transaction to close in the second half of 2021.