UPDATE The California Public Utilities Commission on Thursday approved Verizon’s $6 billion proposed acquisition of TracFone Wireless, according to Reuters. Under the agreement with the state utility commission, TracFone or Verizon must participate in a program providing subsidized wireless service for low-income consumers in the U.S. for 20 years.
In September 2020, Verizon said it would buy pre-paid mobile phones provider TracFone, a unit of Mexican telecom company America Movil, in a cash and stock deal worth up to $6.9 billion. The deal, approved by the Justice Department, awaits approval by the FCC, which has been reviewing it.
TracFone is one of the largest providers of telecommunications services under the Lifeline government subsidy program, with around 1.7 million low-income subscribers in 43 states and the District of Columbia, according to Reuters. Lifeline provides 9.1 million Americans with free or discounted broadband and voice services through its agreements with phone and broadband providers.
The agreement stipulates that TracFone must enroll at least 200,000 Lifeline subscribers in the state by the end of 2025. TracFone or Verizon must offer Lifeline customers a phone at no cost, including 5G phones after the first year of the merger. TracFone or Verizon must offer plans with comparable voice, text, and data at the same or lower price as TracFone currently offers for five years.
Five Democratic U.S. senators recently issued a warning: “Verizon would have significant incentives and opportunities to push subscribers from Lifeline and inexpensive prepaid services to higher revenue plans” and urged the FCC to ensure the deal does not raise prices. In February, the attorneys general of 16 U.S. states urged the FCC to thoroughly investigate the transaction, Inside Towers reported.
TracFone serves about 21 million customers. Verizon is the largest U.S. wireless carrier by subscribers, according to the account.
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