Verizon Communications said Monday it will buy wireless services provider Tracfone, a unit of Mexican telecom America Movil, in a $6.25 billion cash and stock deal, reported the Wall Street Journal.
Several mergers in recent years have led to an increasingly concentrated wireless industry in the US, with the bulk of control under Verizon, AT&T and T-Mobile, which recently completed its merger with Sprint. Tracfone is the largest prepaid mobile brand in the United States, with approximately 21 million subscribers and more than 90,000 retail locations, which means Verizon will boost its subscriber base considerably. It also plans to sell 5G to Tracfone customers in the coming years as carriers compete to roll out the faster networks.
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 cell phone carrier with about 120 million connections, including tablets and other devices, but it has been competing in a mature market that is now dominated by three providers. T-Mobile US became the No. 2 provider by subscribers after swallowing Sprint earlier this year.
Full Content: Wall Street Journal