Under the terms of the deal that is subject to approval from telecom and antitrust regulators, Verizon said the TracFone purchase will include about $3.1 billion in Verizon shares and $3.1 billion in cash. If TracFone meets performance measures, it could get an additional $650 million in cash.
TracFone is a division of América Móvil, a Mexico City-based telecommunications corporation. It boasts 21 million prepaid customers in the U.S. under its flagship brand, as well as Net10 and StraightTalk.
The company lacks a network in the U.S. and instead leases other cell phone carriers’ platforms.
With 120 million customers, Verizon is seen as the biggest U.S. carrier. The next-largest is T-Mobile US Inc. after it agreed to buy Sprint earlier this year.
The WSJ reported Verizon had about 4 million prepaid wireless customers in June while AT&T serves about 18 million U.S. prepaid customers and T-Mobile has more than 20 million prepaid customers. The addition of TracFone would put Verizon at the top of the prepaid market.
“It’s a business we know well but it’s not one where we’ve been driving our own destiny,” Ronan Dunn, executive vice president and CEO of Verizon Consumer Group, told the newspaper. “They’re a winner in this segment already. We see this as a growth platform.”
He added that TracFone will still be a distinct business, but will benefit from wider range of cellphones, smart devices and connected home products through the Verion’s ownership, the news outlet reported.
In July, Verizon Business introduced a small-medium-sized businesses (SMBs) resource hub. The one-stop destination combines Verizon’s pandemic SMB relief offerings with information to assist small companies.
“Post-pandemic recovery for small businesses will require much more than just financial assistance,” said Verizon Business CEO Tami Erwin in the announcement. “Our new hub provides a robust destination for collaboration and support tools to guide business owners and entrepreneurs in reimagining their strategic visions to align with our new world realities.”
In addition, Verizon unveiled Comeback Coach which links certain small companies with top influencers in the SMB space. The mentorship initiative will be captured during the next couple of months to come, with the first episodes to be unveiled in August.