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Verizon, the nation’s largest phone company, is buying prepaid phone vendor Tracfone for up to $6.9 billion, expanding its business with low-income customers.
Tracfone, a subsidiary of Mexican telecommunications giant America Movil, is the largest mobile phone retailer in the United States. It doesn’t build its own network, but pays fees to companies like Verizon, AT&T and T-Mobile to use theirs. Nearly two-thirds of Tracfone’s 21 million US customers get their service from Verizon through Tracfone leasing Verizon’s network.
Most US cellphone customers are “postpaid” rather than prepaid – they pay a monthly phone bill. Prepaid customers are more likely to be low income or have bad credit. Tracfone is a major provider of the US service Lifeline, which offers discounts on phone and internet services for low-income customers. Verizon said Monday it would continue to offer Lifeline through Tracfone.
The deal consists of $3.1 billion in cash, $3.1 billion in stock and up to an additional $650 million in cash for America Movil based on the Tracfone business meeting certain performance targets after the sale.
Verizon said it expects the deal to close in the second half of 2021. Regulators must approve it.
Associated Press writer Mark Stevenson contributed from Mexico City.
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