Verizon purchases prepaid wireless provider Tracfone for around $7 billion

Verizon to buy pre-paid mobile service Tracfone in $6.25 billion deal

Verizon is increasing its customer base by pushing into the low-income cellular market, by announcing an acquisition of major virtual mobile network Tracfone for more than $6 billion.

The news comes courtesy of a press release published to Verizon's site earlier today, and it sounds like nothing will really be changing for the 21 million current Tracfone customers, many of which are already essentially using Verizon service through a prior agreement with Tracfone, which is an MVNO.

Another big shift is taking place in the wireless space, with Verizon making the formal announcement on September 13 that it's now entered an agreement to purchase Tracfone. Following the acquisition, Verizon aims to bring its 4G LTE and 5G networks to TracFone customers, develop its distribution channels, and expand its market opportunities.

Credit Suisse is acting as financial adviser to Verizon on the deal, which is expected to close in the second half of 2021. Verizon said Monday that it would continue to offer Lifeline through Tracfone.

"We're looking forward to welcoming all of Tracfone's customers and each of Tracfone's almost 850 valuable employees".

Tracfone is indeed the largest MVNO in the US and operates brands like TracFone, StraightTalk Wireless, SIMPLE Mobile, NET10 Wireless, and Total Wireless. "We are pursuing this important strategic acquisition from a position of strength given our very strong and prudent financial profile".

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.

The acquisition expands Verizon's portfolio into the value segment, enhancing its wireless network and comprehensive suite of mobility products and services to a new customer base.

Verizon Communications (VZ) has phoned the executive team at Tracfone, and has inked a deal. 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. And if you're keeping track of the investment banking league tables for some odd reason, Credit Suisse acted as financial advisor to Verizon and Debevoise & Plimpton acted as its legal advisor.

The deal includes $3.125 billion in cash and $3.125 billion in Verizon stock.



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