The US market for mobile operators continues to consolidate. The latest acquisition comes when Verizon begins buying Tracfone, a popular prepaid carrier, with phones and prepaid service cards a common sight on Walmart electronics shelves. The deal includes $ 3.125 billion in cash and as much in stock, plus $ 650 in extra money to reach performance targets.
Tracfone currently has 21 million prepaid customers according to the press release, which is a significant part, even next to Verizon’s 90+ million. Tracfone sells SIM cards, prepaid budget smartphones and base phones and refills service cards. Verizon and its Big Three competition are trying to expand into cheaper deals, as the COVID pandemic’s unemployment and economic downturn are pulling more and more mobile customers to cheaper plans and devices.
Verizon already offers prepaid service, but nothing as cheap as Tracphone’s bottom line, which offers 500 minutes, 500 text messages and just 500 megabytes of data for $ 15 a month. Verizon’s cheapest plan is $ 40 a month for 5 GB (although discounts are available), and Tracfone’s operator agnostic MVNO options allow customers to use different networks with different SIM cards.
Verizon expects the acquisition to be approved by US regulators within a year, which seems feasible. If you’re a current Tracfone customer, do not expect much to change quickly, or even when the deal closes – there’s no reason for Verizon to move with a winning formula.