The Federal Communications Commission (FCC) approved Verizon Communications Inc.’s (NYSE: V) decision to wackier Tracfone for over $6 billion. The purchase makes Verizon one U.S’s largest prepaid service providers.
The acquisition positions Verizon as an industry leader
According to Ronan Dunner, the chief executive of Verizon’s consumer group, adding Tracfone’s portfolio of brands to Verizon establishes the latter as a leading service provider in the market. Verizon intends to develop Tracfone’s brands like SafeLink, Total Wireless, and Straight Talks. Tracfone will also offer the Lifeline program, which subsidizes broadband and phone services to low-income communities.
Tracfone is a leading reseller of wireless services in the country. It was over 90,000 retail sites and 20 million subscribers. The acquisition brings together the largest wireless provider in the U.S with the most prominent mobile virtual network operator. Verizon states that the purchase would make low-income wireless services competitive while improving Tracfone’s network.
The FCC released a statement saying it had reviewed Verizon’s plan to acquire Tracfone and found that it would strengthen both companies and improve their ability to offer Lifeline and prepaid services.
News outlets still don’t know which of the commissioners approved the deal. There are two Democrats and two Republicans serving in the FCC. A vote by at least one Democrat would enable the agreement to pass.
The FCC gives Verizon conditions for the approval
The FCC has said it will approve the deal as long as Verizon made numerous customer protection arrangements with the regulator. These regulations are to ensure that the services Tracfone offers to low-income individuals remain intact. Verizon would have to sustain its collaboration with the Lifeline subsidy for seven years. It must also provide Lifeline customers affordable 5G services and gadgets. Moreover, the company will send semi-annual reports that show its compliance with the arrangement.
The California Public Utility Commission had already approved the deal. It also gave its restoration, most of which were similar to those the FCC gave. One difference is that the commission wants Verizon to retain its partnership with Lifeline for 20 years. Furthermore, Lifeline customers would be eligible for 5G compatible devices at no cost. Verizon will also ensure no increases in the price of a wireless plan for these customers for at least five years.