In September 2020, Verizon Wireless announced that they had entered into an agreement with América Móvil to acquire TracFone Wireless. TracFone Wireless is the number one pre-paid mobile provider in the United States with 21 million customers and over 8 billion in annual revenue. We’ve already seen the Sprint and T-Mobile merger happen, so what does another wireless acquisition mean for customers?
First, let’s look at Verizon Wireless and TracFone Wireless.
Odds are, you’ve heard of both of them. Verizon Wireless reported revenue of $128.3 billion, over 1600 retail locations, and over 132,000 employees, although this data was not separated from its telecommunications division. TracFone Wireless reported revenue of $8.1 billion, over 90,000 retail locations, and 850 employees. TracFone Wireless can be found at retailers such as Walmart, Target, Dollar General, Best Buy, and CVS Pharmacy and under such brands as Net10 Wireless, StraightTalk Wireless, Total Wireless, Simple Mobile, and more.
This agreement would cost Verizon $7 billion.
Verizon expects the transaction to close in the second half of 2021, but with pushback and regulations in place, this may be too ambitious of a goal. This major investment stems from Verizon Wireless admitting that they haven’t been very successful in the pre-paid arena whereas TracFone Wireless has. Verizon Wireless only has 4 million prepaid customers which is a very small percentage of their current customers. Of TracFone Wireless’ 21 million customers around 13 million of them already utilize Verizon Wireless’ network, leaving about 8 million remaining customers on other networks.
“But there’s 8 or 9 million that ride on competitor networks and we have the opportunity to migrate those across to be on to Verizon. So enhance the owner’s economics and with the tools as I say, the CRM and base management and distribution tools, which we believe will allow us to be highly cost-effective in that segment.” – Ronan Dunne, CEO of the Consumer Group at Verizon
This merger will require regulatory approval and as this merger will limit competition, consumer interest groups are pushing back.
The Communications Workers of America (CWA) filed comments in November 2020 urging the FCC to deny the acquisition and look more deeply into the affect this will have on consumers and the market. This pushback comes after the Sprint and T-Mobile merger, which was already a controversial issue meaning there will likely be even more obstacles for this acquisition as it continues to limit consumer choices especially at affordable prices.
Although nothing is concrete yet and we likely won’t see any final news on the subject for quite some time, this acquisition would cause some changes in the wireless market. When the market loses competition in a sector, consumers take the hit. Thankfully, there’s a way to stay ahead of the curve – a Verify! cellular analysis. With a Verify! cellular analysis your business gets a full inventory of accounts, efficiency solutions, and cost-cutting recommendations. Let us worry about the happenings of the wireless world, while you focus on your business. Give us a call today to get started and save an average of 31% on your business wireless accounts.