NEW ORLEANS--América Móvil's U.S. MVNO, TracFone, announced it purchased T-Mobile USA MVNO Simple Mobile. Terms of the deal were not disclosed.
TracFone is the nation's largest MVNO with around 20.1 million subscribers. TracFone said Simple Mobile counts 1 million subscribers.
During a meeting yesterday at the CTIA Wireless trade show here (before the TracFone deal was announced), Simple Mobile's Senior Vice President of Marketing Tim Garrett said the MVNO has recorded 2.5 million device activations.
Simple Mobile operates a "SIM-only" business; the MVNO doesn't sell phones, but offers SIM cards with service to those who bring their own phones to the carrier. Garrett said around 60 percent of the MVNO's subscribers bring their own phone to the service; the rest purchase phones through the distributors that Simple Mobile is allied with. Garrett said the T-Mobile myTouch phone is one of Simple Mobile's most popular devices.
Interestingly, TracFone recently launched its own SIM-only service.
Simple Mobile offers unlimited, high-speed data services, along with unlimited talk and text, for $60 per month. Garrett explained that the carrier's service isn't completely unlimited--he said the MVNO monitors customers' data usage and will take action against those it considers excessive data users, but does so on a case-by-case basis.
Garrett said Simple Mobile was in the process of expanding its marketing efforts from large markets like Miami and Los Angeles to smaller markets like Detroit, Washington D.C. and elsewhere. It's unclear how TracFone will integrate the company; TracFone executives typically don't respond to questions from the media. The company was not immediately available to comment on the news.
"The acquisition will add important new distribution channels for América Móvil and is likely the first step in a broadening strategy," wrote BTIG analyst Walter Piecyk, who estimated that T-Mobile owned 30 percent of Simple Mobile but will not move to block the transaction.
Piecyk wrote that part of the reason that TracFone was attracted to Simple Mobile was due to support for the iPhone. Before the acquisition was announced, Simple Mobile's Garrett said that the company was preparing for a change in T-Mobile's network later this year that would allow Simple Mobile to deliver HSPA services to unlocked iPhones. T-Mobile plans to provide HSPA services over its 1900 MHz spectrum later this year, a move that will allow users with unlocked iPhones to move to T-Mobile's network and make use of its HSPA speeds. Currently, iPhone users can only make use of T-Mobile's EDGE speeds.
TracFone operates a number of MVNO brands across the networks of top U.S. wireless carriers like Sprint Nextel (NYSE:S). The company's prepaid MVNO brands include Straight Talk, Net10 and others. During its first quarter, América Móvil said TracFone reported total revenue of $1.1 billion for the quarter, up 24.4 percent from the year-ago period. The company said service revenues climbed by a similar margin to $970 million. The unit's EBITDA more than doubled from the year-ago period to $140 million. TracFone's average revenue per user in the first quarter climbed to $16, from $14 in the first quarter of 2011.
For more:
- see this release
- see this Wall Street Journal article (sub. req.)
- see this BTIG post (reg. req.)
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