Verizon said on Monday that it's acquiring prepaid mobile provider Tracfone in a cash and stock deal valued around $6.25 billion. Tracfone is one of largest resellers of mobile wireless services in the US, with approximately 21 million subscribers and more than 90,000 retail locations, according to Verizon.
Tracfone functions as a mobile virtual network operator, meaning that doesn't operate its own network and instead leases spectrum from carriers such as Verizon, AT&T and T-Mobile. Verizon said more than 13 million Tracfone subscribers already rely on its network through an existing wholesale agreement.
Strategically, Verizon said the deal aligns with its growth-oriented network-as-a-service strategy. The company is also hoping to use the deal to expand its portfolio into the value mobile and low-income segments, with plans to offer more low-cost wireless options.
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"This transaction is aligned with what we do best: providing reliable wireless service alongside a best-in-class customer experience," said Verizon CEO Hans Vestberg. "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. We are pursuing this important strategic acquisition from a position of strength given our very strong and prudent financial profile."