Verizon announced today that it is purchasing Tracfone from America Movil — the Mexico-headquartered company that apparently owns Tracfone, which still exists. The acquisition will cost around $6.25 billion in equal parts cash and stock, plus 630 million in cash if certain goals are met. After the deal concludes, Tracfone customers will get access to Verizon's network, and Lifeline-linked services will continue to work.
The news comes courtesy of a press release published to Verizon's site earlier today, and it sounds like nothing will really be changing for the 21 million current Tracfone customers, many of which are already essentially using Verizon service through a prior agreement with Tracfone, which is an MVNO. It isn't clear how the change might affect other Tracfone brands like Simple Mobile, though, which use other networks.
After the acquisition is complete, Verizon will continue to offer so-called "Lifeline" services via Tracfone (branded as SafeLink) for those that qualify for the government benefit program. It also sounds like Verizon will keep Tracfone's existing distribution channels, including apparently 90,000+ partner retail locations.
Verizon has already been dabbling in the value segment of the market a bit with Visible, but this acquisition shows more than a passing interest, and a convenient way to step up its involvement: Rather than build up a brand on its own (as it's already doing), it can simply swallow up an MVNO it's already working with — even if most of us probably forgot that Tracfone even existed, it has plenty of paying customers.