TRACFONE is good business

Verizon buys America Movil - Unit TracFone for around 6.9 billion dollars, thereby strengthening prepaid business

The US telecommunications network operator Verizon Communications Inc. (NYSE: VZ) has announced the acquisition of TracFone. The company, which belongs to the Mexican billionaire Carlos Slim, sells cell phone contracts in the United States.

The parties involved have agreed a purchase price of up to US $ 6.9 billion for the US mobile communications service provider TracFone. The takeover is to take place in cash and shares.

With the acquisition, the US mobile communications market continues to consolidate, but these are prepaid customers who are generally considered to be willing to switch and have poor credit ratings and are therefore less important compared to postpaid customers.

TracFone is a unit of the Mexican mobile network operator América Móvil, S.A.B. de C.V. and markets third party wireless contracts under the same brand and name StraightTalk and Net10 in the US.

The company does not have its own mobile network and is therefore a pure distributor or reseller of its own and third-party mobile phone contracts. Credit Suisse is the financial advisor to Verizon in this transaction.

Tracfone is the largest cellular service reseller in the United States, serving approximately 21 million prepaid subscribers through a network of over 90,000 retail locations across the country.

The company is a long-term partner of Verizon and has added more than 13 million subscribers to the Verizon wireless network under an existing wholesale agreement.

However, Verizon Communications plans to offer Tracfone customers 4G LTE and 5G contracts as well as other innovative technologies in the future and to further develop Tracfone's sales channels.

"The acquisition of Tracfone is in line with Verizon's growth-oriented Network as a Service strategy," said the US network operator and T-Mobile counterparty.