California approves Verizon deal to acquire TracFone Wireless

FILE PHOTO: The Verizon store in Superior
FILE PHOTO: The Verizon store in Superior, Colorado, U.S., July 27, 2017. REUTERS/Rick Wilking

November 19, 2021

By David Shepardson

WASHINGTON (Reuters) -The California Public Utilities Commission said Thursday it has approved Verizon Communications’ more than $6 billion proposed acquisition of TracFone Wireless after the companies agreed to some additional consumer protection conditions.

Under the agreement with the California regulator, TracFone or Verizon must participate in a U.S. program providing subsidized wireless service for low-income consumers for 20 years.

Verizon said in September 2020 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 was previously approved by the Justice Department and is awaiting approval by the Federal Communications Commission, which has been reviewing the deal.

Verizon declined to comment Thursday.

TracFone is one of the largest providers of telecommunications services under the government subsidy program known as Lifeline with around 1.7 million low-income subscribers in 43 states and the District of Columbia.

Under the agreement with California, 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.

In July, five Democratic U.S. senators warned “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 deal.

TracFone serves about 21 million customers. Verizon is the largest U.S. wireless carrier by subscribers.

Lifeline in total provides 9.1 million Americans with free or discounted broadband and voice services through its agreements with phone and broadband providers.

(Reporting by David Shepardson, Editing by Rosalba O’Brien and Aurora Ellis)