Verizon buying TracFone Wireless service for US$6.25b

[NEW YORK] Verizon Communications has agreed to buy TracFone Wireless from America Movil for US$6.25 billion, as the largest US wireless carrier seeks to expand its mobile business into the so-called prepaid market.

Verizon will pay US$3.125 billion in cash and US$3.125 billion in stock, with as much as US$650 million additional tied to performance goals. TracFone, a US prepaid mobile service, is a subsidiary of Carlos Slim Domit's Mexico-based America Movil wireless. It's the largest US prepaid service, with 21 million subscribers.

The acquisition comes as Verizon faces new pressure from an enlarged T-Mobile US, which concluded its merger with Sprint earlier this year. T-Mobile has 20.6 million prepaid subscribers, with the largest group under the Metro brand. AT&T has 18 million prepaid subscribers, most under its Cricket brand.

Though Verizon is the largest wireless carrier overall, with 116 million regular monthly subscribers, it has only 4 million prepaid customers.

BLOOMBERG