FCC OKs Verizon acquisition of TracFone

After more than a year in the making, Verizon finally received the approval it was waiting for: The Federal Communications Commission (FCC) voted to approve, with conditions, its acquisition of TracFone Wireless.

Verizon announced in September 2020 that it wanted to acquire TracFone from América Móvil in a deal worth up to $6.9 billion. Up until then, Verizon paid little attention to the prepaid space, where rivals AT&T and T-Mobile have been operating the Cricket Wireless and Metro brands, respectively, after acquisitions of their own years ago.

Most of TracFone’s 20 million subscribers already use Verizon’s network under an MVNO arrangement, but TracFone also uses the networks of AT&T and T-Mobile to serve its customers. Those customers eventually will move to Verizon’s network.

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With an eye toward the communities that TracFone primarily serves in the U.S., the commission adopted a number of conditions designed to protect low-income consumers from price increases, ensure support for Lifeline participants, guarantee affordable 5G devices and maintain existing packages for TracFone subscribers, according to the FCC.

Enforcement mechanisms include both an internal and an independent compliance officer who are empowered to proactively monitor conditions, ensure that low-income consumers are not being harmed and handle consumer complaints about potential violations, the agency said. The FCC’s order also requires public reporting and more than seven years of oversight.

Here are some of the things that Verizon must do under the FCC's order:

  • Offer TracFone’s Lifeline-supported services over the same service areas for at least seven years;
  • Offer a free, compatible device or SIM in certain circumstances where Lifeline customers are being required to transition to Verizon’s network; 
  • Continue to offer and advertise existing Lifeline plans, with no added co-pays to TracFone’s existing Lifeline plans offered at no cost to prepaid customers for at least three years; 
  • Make available to existing and new Lifeline prepaid customers a 5G plan and offer a range of cost-effective 5G devices to existing and new Lifeline customers; 
  • Maintain a specified level of marketing and advertising expenditures for Lifeline.

The FCC’s vote comes less than a week after the California Public Utilities Commission (CPUC) gave its approval to the transaction with its own set of statewide conditions.

RELATED: Verizon’s acquisition of TracFone wins CPUC approval

Verizon had been expecting to close the deal before the end of this year. Update: Verizon announced Tuesday that it closed the TracFone acquisition.

“The deal will provide customers with the best of both worlds: more choices, better services and new features thanks to Verizon’s investment and innovation. Customers will benefit with enhancements in devices, network performance and innovative products and services – as well as a continued commitment to Lifeline,” said Kathy Grillo, Verizon SVP, public policy and government affairs, in a statement. “We will work hard to serve TracFone’s current customers and look forward to serving new ones in this dynamic and fast-growing marketplace.”