Verizon To Buy Tracfone: ETFs In Focus

The telecommunication services sector is also witnessing consolidation amid the M&A spree. Verizon Communications (VZ - Free Report) agreed to acquire prepaid wireless service provider TracFone from America Movil (AMX - Free Report) for as much as $6.9 billion. The move comes as the largest U.S. wireless carrier seeks to expand its mobile business into the so-called prepaid market.

Per the terms of the deal, Verizon will pay $3.125 billion in cash and $3.125 billion in stock. The agreement also includes up to an additional $650 million as future cash consideration related to the achievement of certain performance measures and other commercial arrangements.

The combination will aid Verizon to expand its presence in the prepaid and value segments of the U.S. wireless business as the industry transitions to the next-generation 5G networks. The acquisition of Tracfone aligns with Verizon’s growth-oriented Network as a Service strategy and will provide more U.S. consumers who are seeking value wireless plans with improved experiences and enhanced services including fixed wireless residential broadband solutions, 5G access and expanded international calling and roaming options.

The deal is expected to reap significant benefits and draw network synergies. It will be accretive in the first year following the transaction’s closing. The deal, expected to be completed in the second half of 2021, is pending regulatory approvals and other customary closing conditions.

Market Impact

Following the merger announcement, shares of America Movil gained 7.7% at the close on Sep 14 with an elevated volume of 5.4 million shares a day compared to average daily volume of 2.5 million shares. Meanwhile, Verizon shares were up 0.9%.

The news put the spotlight on a number of ETFs that could be the best bets for investors to tap the opportunity arising from the Verizon deal. These funds are expected to see smooth trading in the weeks ahead:

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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