Following today’s news (23 November) that Verizon has completed its acquisition of TracFone;

Tammy Parker, Principal Analyst at GlobalData, a leading data and analytics company, offers her view:

“The TracFone acquisition fills a significant gap in Verizon’s consumer wireless services portfolio, and provides Verizon with massive scale as it gains the largest US prepaid services reseller. Verizon’s performance in prepaid has long been a roller-coaster ride, as the company has been careful about potentially cannibalizing its flagship postpaid business. By leveraging TracFone’s existing roster of brands, Verizon can be aggressive in the prepaid sector without harming its postpaid branding.

“The Verizon-TracFone merger should help reenergize the prepaid sector, amping up the competitive fervor between the secondary brands of the nationwide mobile network operators (MNOs). Those include AT&T’s Cricket Wireless and Metro by T-Mobile.

“Verizon-owned TracFone will have more devices and services to offer customers. Further, with its ongoing rollout of 5G, Verizon’s network is increasingly primed to take on lots of new subscribers. Verizon already serves more than 13 million of TracFone’s approximately 20 million subscribers through their existing wholesale agreement, so little will change for those customers. Verizon will move to shift the other 7 million off of rival networks onto its own over time. Additionally, TracFone has a network of over 90,000 retail locations and brings strong national distribution that Verizon can build on.

“On the negative side, despite consumer protections required by federal and state regulators, TracFone’s acquisition removes an independent service provider from the market. This will fundamentally alter the prepaid options available to consumers.

“TracFone’s shift away from being an independent mobile virtual network operator (MVNO) reflects a larger trend in which MVNOs are finding it challenging to compete as network operators continue aggressively growing their retail businesses, while many MVNOs struggle to establish national mass market reach. With no large, national MVNO poised to assume TracFone’s market-leading role, GlobalData forecasts that MVNOs’ subscription share in the US will slide from 8% in 2021 to 7.8% by 2026.”