US mobile operator Verizon Wireless has signalled its intention to expand into the “value” segment of the market with the $6.9 billion acquisition of US low-cost carrier TracFone from America Movil.
Founded in 1996, TracFone operates Mobile Virtual Network Operator (MVNO) services under several different brands, including Simple Mobile, Page Plus Mobile and Total Wireless, powered by wholesale agreements with several major US operators.
TracFone’s 21 million customers and 90,000 retail locations provide a platform for Verizon to grow, while the fact that the latter’s network already powers services for 13 million Total Wireless subscribers mean there are obvious synergies associated with the deal.
Verizon also believes it can grow the business by using its network innovations to add value to subscriptions. For example, it plans to offer Fixed Wireless Access (FWA) broadband services, 5G, and international calling and roaming packages on low-cost price plans.
“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,” said Hans Verstberg, Verizon CEO.
However, approval from the US Federal Communications Commission (FCC) is conditional on ensuring that low-income customers are protected and that TracFone continues to participate in a subsidy programme for low-income households. Both commitments will be monitored.
“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,” added Ronan Dunne, CEO of the Verizon Consumer Group.
“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.”
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