Verizon is buying TracFone Wireless for $6.25 billion

Verizon Communications Inc. has agreed to buy TracFone Wireless Inc. from America Movil SAB for $6.25 billion, as the largest U.S. wireless carrier seeks to expand its mobile business into the so-called prepaid market.

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

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

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