Verizon has completed its takeover of MVNO Tracfone from America Movil after agreeing several conditions for FCC approval. The concessions are designed to protect the many low-income customers at Tracfone, as well as other MVNOs using Verizon's network.
The takeover was first agreed over a year ago, for USD 6.25 billion in cash and shares. Tracfone operates under brands such as Straight Talk and Safe Link Wireless and counted over 20.1 million customers at the end of September. According to Verizon, Tracfone is the largest mobile services reseller in the US market, distributing its services through over 90,000 retail outlets.
Verizon is paying half the purchase price in cash and the other half in 57.6 million new shares issued to America Movil. If Tracfone achieves certain operating targets, Verizon will pay another USD 650 million cash as part of the purchase price.
Under the agreement with the FCC, Verizon has agreed to maintain Tracfone's LifeLine services, provided with public subsidy to low-income people. These will be provided in the same service areas for at least seven years, and Verizon will continue to market and advertise the services and offer the same tariff plans for at least three years.
The company will also maintain certain network agreements to serve Lifeline customers off the Verizon network for three years. When Lifeline customers are required to switch to the Verizon network, they will be offered a free device or Sim in some cases. Existing and new Lifeline prepaid customers also will gain access to a 5G plan and affordable 5G devices.
To support the wider MVNO market, Verizon will offer its current wholesale customers an option to extend their existing network deals on the same terms and conditions, on a month-to-month basis until three years after the transaction closes.
Verizon will need to submit regular compliance reports to the FCC and pay for an independent expert to ensure its compliance with these commitments for seven and a half years.
Verizon welcomed the news of the FCC's approval. "The deal will provide customers with the best of both worlds: more choices, better services and new features thanks to Verizon’s investment and innovation," the company said in a statement.
