Verizon to acquire Tracfone
September 14 2020 - 8:00AM
Verizon (NYSE: VZ) announced today that it has entered into an
agreement with America Movil to acquire Tracfone, the leading
pre-paid and value mobile provider in the U.S. The acquisition
expands Verizon’s portfolio into the value segment, bringing
enhanced access to its industry-leading wireless network and
comprehensive suite of mobility products and services to a new
customer base.
Tracfone is the largest reseller of wireless
services in the US, serving approximately 21 million subscribers
through a network of over 90,000 retail locations nationwide. A
longtime partner of Verizon, more than 13 million Tracfone
subscribers currently rely on Verizon’s wireless network through an
existing wholesale agreement.
Following the acquisition, Verizon expects to
bring its award-winning 4G LTE and 5G networks and other innovative
technologies to Tracfone customers, further develop Tracfone’s
distribution channels, and expand Tracfone’s market
opportunities.
The acquisition of Tracfone aligns with
Verizon’s growth oriented Network as a Service strategy, and will
provide more U.S. consumers seeking value wireless plans with
improved experiences and enhanced services, including fixed
wireless residential broadband solutions, 5G access and expanded
international calling and roaming options. The portfolio of
Tracfone brands creates a platform for growth and innovation in
Verizon’s support of the value and low income segments. Verizon
will continue to offer Lifeline service through Tracfone and
further develop its core brands, products and distribution
channels, including StraightTalk, the vast majority of whose
customers operate on the Verizon network today.
“This transaction is aligned with what we do
best: providing reliable wireless service alongside a best-in-class
customer experience,” said Hans Vestberg, Chairman and CEO of
Verizon. “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.”
Ronan Dunne, Executive Vice President and Group
CEO, Verizon Consumer Group added: “Since its launch, Tracfone has
developed strong consumer brands and has established itself as a
clear leader in the value mobile segment. 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.”
“We’re looking forward to welcoming all of
Tracfone’s customers and each of Tracfone’s nearly 850 valuable
employees. We are excited to expand our relationship with
Tracfone’s distribution partners, and when Tracfone’s customers
become part of our family, they will get the best of both worlds –
more choices, better services, and new features thanks to Verizon’s
investment – but with the flexibility and control that they have
come to value with its prepaid plans. Being connected is now
more important than ever, and Tracfone customers will benefit from
Verizon’s innovations – both now and in the future,” he added.
The consideration for the transaction will
include $3.125 billion in cash and $3.125 billion in Verizon common
stock, subject to customary adjustments, at closing. The
agreement also includes up to an additional $650 million in future
cash consideration related to the achievement of certain
performance measures and other commercial arrangements.
Verizon expects to drive significant benefits
and network synergies from the transaction. Verizon expects the
transaction to be accretive in the first full year following
closing, excluding transaction and integration costs, and does not
expect the transaction to materially impact capital
expenditures.
The transaction is subject to receipt of
regulatory approvals and other customary closing conditions.
Verizon expects the transaction to close in the second half of
2021.
Credit Suisse acted as financial advisor to
Verizon and Debevoise & Plimpton acted as legal advisor.
Verizon Communications Inc. (NYSE, Nasdaq: VZ)
was formed on June 30, 2000 and is celebrating its 20th year as one
of the world’s leading providers of technology, communications,
information and entertainment products and services. Headquartered
in New York City and with a presence around the world, Verizon
generated revenues of $131.9 billion in 2019. The company offers
data, video and voice services and solutions on its award winning
networks and platforms, delivering on customers’ demand for
mobility, reliable network connectivity, security and control.
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