Verizon to gain around 20M new mobile customers any day now

Reuters reported that the FCC's four commissioners will approve Verizon's purchase of América Móvil's TracFone shortly. The prepaid provider counts a total of around 20 million customers.

Mike Dano, Editorial Director, 5G & Mobile Strategies

November 22, 2021

3 Min Read
Verizon to gain around 20M new mobile customers any day now

According to a number of reports, the FCC is in the final stages of reviewing Verizon's plan to purchase América Móvil's TracFone. That approval would pave the way for an increase in Verizon's total customer base by roughly 20 million.

Reuters reported that the agency's four commissioners will approve the deal shortly.

The FCC's stamp of approval is the last regulatory hurdle facing Verizon, which is noteworthy given the company's efforts to close its purchase of TracFone. The California Public Utilities Commission approved the transaction last week, and the US Department of Justice signed off on the deal last year.

To obtain the regulatory approvals, Verizon has made a number of promises, including to provide 5G services to TracFone customers, and to continue to support the government's Lifeline service for low-income Americans.

Verizon first announced its intention to acquire TracFone more than a year ago, for around $7 billion. The transaction will make Verizon the biggest provider of prepaid services in the US.

Customer declines

Much has changed in the intervening months. Notably, América Móvil recently reported its first-ever loss of prepaid Straight Talk-branded customers. Straight Talk is one of TracFone's many US prepaid brands, and it accounts for almost half of TracFone's customers. Indeed, TracFone overall has lost almost 1,000 total customers since Verizon announced plans to acquire the company.

América Móvil officials blamed the situation on a shortage of phones. "We are seeing a little bit of problem of handsets," América Móvil CEO Daniel Hajj said in response to questions on the topic, according to a company transcript of its recent earnings call. "So we don't have enough handsets to sell."

Of course, América Móvil isn't alone in that regard. A number of wireless network operators, as well as phone suppliers themselves, have reported supply shortages due to factors including difficulties in buying some chipsets.

More broadly, though, Verizon has said that, if it successfully acquires TracFone, it will use its buying power to acquire more phones for the company. Further, Verizon has said it plans to support TracFone while maintaining its various brands, including Straight Talk.

"What we will, of course, support them with this [is] all the back-end support all the way from supply chain, IT support, UX, customer care and all of that," Vestberg said during Verizon's recent quarterly conference call, according to a company transcript of his remarks. "But clearly, we want to keep the point of sales. We want to keep the offerings, and we want to serve the value market."

To be clear, Verizon has said that around 62% of TracFone's customers use its mobile network; the remainder use other networks, including those of AT&T and T-Mobile. However, Verizon will have the ability to shift those customers onto its own network as well as sell them new services, including fixed wireless Internet offerings.

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Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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