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MarketScreener Homepage  >  Equities  >  Nyse  >  Verizon Communications Inc.    VZ

VERIZON COMMUNICATIONS INC.

(VZ)
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Verizon Communications : to Buy TracFone in Deal Worth Up to $7 Billion -- Update

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09/14/2020 | 10:04am EDT

By Drew FitzGerald

Verizon Communications Inc. said it has agreed to buy prepaid wireless reseller TracFone for up to $7 billion in cash and stock, bringing the country's largest reseller of cellphone services under the wing of the country's biggest wireless provider.

TracFone, a unit of Mexico's América Móvil SAB, operates in the U.S. under its namesake brand as well as StraightTalk and Net10. The company doesn't run its own physical network in the U.S. and instead rides on other cellphone carriers' systems for a fee.

About 13 million of TracFone's 21 millions subscribers already use Verizon's network through an existing agreement.

Verizon said the deal will include about $3.125 billion of cash and $3.125 billion in Verizon shares. TracFone could get an additional $650 million cash payment tied to some performance measures and other commercial arrangements.

Verizon is the biggest U.S. provider with about 120 million connections, but it has been competing in a mature market that is now dominated by three providers. T-Mobile US Inc. became the No. 2 provider by subscribers after swallowing Sprint earlier this year.

TracFone, backed by Mexican billionaire Carlos Slim Helu, grew into the biggest U.S. cellphone reseller by catering to frugal customers through Walmart Inc. stores and other independent dealers. It offers service for as little as $15 a month with limits on internet data as well as the number of texts and phone calls.

The coronavirus pandemic helped boost TracFone's subscriber numbers earlier this summer, though the company's growth has flagged in recent years under pressure from AT&T Inc. and T-Mobile prepaid plans.

The deal is subject to approval from antitrust and telecom regulators. Federal competition enforcers have traditionally viewed virtual-network operators like TracFone as resellers of wholesale network capacity owned by companies like Verizon that own the cell tower equipment and lines that carry their traffic, so the deal is unlikely to attract as much scrutiny as T-Mobile's Sprint takeover did when it was announced in 2018. Verizon said it expects its transaction to close in the second half of 2021.

Traditional wireless providers also face competition from cable providers like Charter Communications Inc. and Comcast Corp., which now resell cellular service to their customers using networks operated by Verizon and others.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com

 


Stocks mentioned in the article
ChangeLast1st jan.
AMÉRICA MÓVIL, S.A.B. DE C.V. -1.90% 13.43 End-of-day quote.-11.06%
VERIZON COMMUNICATIONS INC. -0.74% 57.38 Delayed Quote.-5.85%
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Financials (USD)
Sales 2020 128 B - -
Net income 2020 18 183 M - -
Net Debt 2020 107 B - -
P/E ratio 2020 13,1x
Yield 2020 4,29%
Capitalization 239 B 239 B -
EV / Sales 2020 2,70x
EV / Sales 2021 2,61x
Nbr of Employees 133 200
Free-Float 96,4%
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Technical analysis trends VERIZON COMMUNICATIONS INC.
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TrendsBearishNeutralNeutral
Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 27
Average target price 62,30 $
Last Close Price 57,81 $
Spread / Highest target 21,1%
Spread / Average Target 7,77%
Spread / Lowest Target -6,59%
EPS Revisions
Managers
NameTitle
Hans Erik Vestberg Chairman & Chief Executive Officer
Matthew D. Ellis Chief Financial Officer & Executive Vice President
Kyle J. Malady Chief Technology Officer & Executive VP
Clarence Otis Lead Independent Director
Melanie Liddle Healey Independent Director
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