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MarketScreener Homepage  >  Equities  >  Nasdaq  >  T-Mobile US    TMUS

T-MOBILE US

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T Mobile US : Verizon to buy pre-paid mobile service Tracfone in $6.25 bln deal

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09/14/2020 | 09:47am EDT

Sept 14 (Reuters) - Verizon Communications Inc 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 cash and stock deal.

Tracfone, which serves about 21 million subscribers through more than 90,000 retail locations across the United States, said more than 13 million of its subscribers rely on Verizon's network under an existing agreement. Verizon is the largest U.S. wireless carrier by subscribers.

The U.S. wireless industry is concentrated in the hands of three mobile carriers due to several mergers in recent years: T-Mobile, which in April completed its $23 billion merger with Sprint Corp to solidify its position in the United States; AT&T Inc, 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.

Verizon has not historically invested in prepaid compared with its rivals, such as T-Mobile, which revamped its MetroPCS prepaid brand and bought Sprint, which had a large prepaid business.

Verizon’s purchase of Tracfone comes at a time when the pandemic has ravaged the economy and Americans are cutting back on spending.

Tracfone had become popular with the lower end of the ultra-competitive U.S. telecoms consumer market and Verizon 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 Consumer Group.

Shares of Verizon were up more than 1% in morning trading. American Movil shares jumped more than 3.5% when the Mexican market opened.

The deal includes $3.125 billion in cash and $3.125 billion 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. (Reporting by Ayanti Bera in Bengaluru and Drazen Jorgic in Mexico City; Additional reporting by Sheila Dang; Editing by Vinay Dwivedi, Will Dunham and Dan Grebler)


Stocks mentioned in the article
ChangeLast1st jan.
AMÉRICA MÓVIL, S.A.B. DE C.V. -1.65% 13.69 End-of-day quote.-9.34%
T-MOBILE US -1.89% 110.61 Delayed Quote.43.31%
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Financials (USD)
Sales 2020 66 185 M - -
Net income 2020 2 089 M - -
Net Debt 2020 66 261 M - -
P/E ratio 2020 61,2x
Yield 2020 -
Capitalization 139 B 139 B -
EV / Sales 2020 3,10x
EV / Sales 2021 2,71x
Nbr of Employees 53 000
Free-Float 47,0%
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Mean consensus BUY
Number of Analysts 27
Average target price 136,35 $
Last Close Price 112,38 $
Spread / Highest target 91,3%
Spread / Average Target 21,3%
Spread / Lowest Target -12,8%
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NameTitle
G. Michael Sievert President, Chief Executive Officer & Director
Timotheus Höttges Chairman
Peter Osvaldik EVP, Chief Financial & Accounting Officer
Neville R. Ray President-Technology Department
Cody Sanford Executive VP & Chief Information & Product Officer
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