Verizon said on Monday it will buy pre-paid mobile phones provider Tracfone, a unit of Mexican telecoms giant America Movil, in a $6.25 billion (roughly Rs. 45,932 crores) cash and stock deal.
Tracfone, which serves about 21 million subscribers through more than 90,000 retail locations across United States, said more than 13 million of its subscribers rely on Verizon's network under an existing agreement. Verizon is the largest US wireless carrier by subscribers.
The US wireless industry is concentrated in the hands of three mobile carriers due to several merger deals in recent years: T-Mobile, which in April completed its $23 billion (roughly Rs. 1,69,032 crores) merger with Sprint to solidify its position in the United States, AT&T, and Verizon.
America Movil, which was created from a state monopoly, is Mexico's largest telecoms operator by far and is controlled by the family of Mexican billionaire Carlos Slim, the Latin American nation's richest man.
Tracfone had become popular with the lower end of the ultra-competitive US telecoms consumer market and Verizon now plans to provide new products for that segment after this "strategic acquisition," said Hans Vestberg, chairman and chief executive of Verizon.
"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, executive vice president and group CEO, Verizon.
Shares of Verizon were up more than 1 percent in morning trading. American Movil shares jumped more than 3.5 percent when the Mexican market opened.
The deal would include $3.125 billion (roughly Rs. 22,972 crores) in cash and $3.125 billion (roughly Rs. 22,972 crores) in Verizon stock.
Credit Suisse is acting as financial adviser to Verizon on the deal, which is expected to close in the second half of 2021.
© Thomson Reuters 2020
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