According to a number of reports, the FCC is in the final stages of reviewing Verizon's plan to purchase América Móvil's TracFone. That approval would pave the way for an increase in Verizon's total customer base by roughly 20 million.
Reuters reported that the agency's four commissioners will approve the deal shortly.
The FCC's stamp of approval is the last regulatory hurdle facing Verizon, which is noteworthy given the company's efforts to close its purchase of TracFone. The California Public Utilities Commission approved the transaction last week, and the US Department of Justice signed off on the deal last year.
To obtain the regulatory approvals, Verizon has made a number of promises, including to provide 5G services to TracFone customers, and to continue to support the government's Lifeline service for low-income Americans.
Verizon first announced its intention to acquire TracFone more than a year ago, for around $7 billion. The transaction will make Verizon the biggest provider of prepaid services in the US.
Customer declines
Much has changed in the intervening months. Notably, América Móvil recently reported its first-ever loss of prepaid Straight Talk-branded customers. Straight Talk is one of TracFone's many US prepaid brands, and it accounts for almost half of TracFone's customers. Indeed, TracFone overall has lost almost 1,000 total customers since Verizon announced plans to acquire the company.
América Móvil officials blamed the situation on a shortage of phones. "We are seeing a little bit of problem of handsets," América Móvil CEO Daniel Hajj said in response to questions on the topic, according to a company transcript of its recent earnings call. "So we don't have enough handsets to sell."
Of course, América Móvil isn't alone in that regard. A number of wireless network operators, as well as phone suppliers themselves, have reported supply shortages due to factors including difficulties in buying some chipsets.
More broadly, though, Verizon has said that, if it successfully acquires TracFone, it will use its buying power to acquire more phones for the company. Further, Verizon has said it plans to support TracFone while maintaining its various brands, including Straight Talk.
"What we will, of course, support them with this [is] all the back-end support all the way from supply chain, IT support, UX, customer care and all of that," Vestberg said during Verizon's recent quarterly conference call, according to a company transcript of his remarks. "But clearly, we want to keep the point of sales. We want to keep the offerings, and we want to serve the value market."
To be clear, Verizon has said that around 62% of TracFone's customers use its mobile network; the remainder use other networks, including those of AT&T and T-Mobile. However, Verizon will have the ability to shift those customers onto its own network as well as sell them new services, including fixed wireless Internet offerings.
Related posts:
Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano