Mexico’s America Movil closed the sale of its TracFone wireless unit to Verizon Communications Inc, the telecoms company said on Tuesday, in a deal worth more than $6 billion in cash and Verizon stock.
America Movil, controlled by the family of Mexican billionaire Carlos Slim, received more than $3.6 billion in cash from the sale of pre-paid mobile phone provider TracFone and nearly 57.6 million shares of Verizon, the company said in a statement filed to the Mexican stock exchange.
Verizon must pay an additional amount of up to $650 million in cash within two years, subject to TracFone meeting certain operation goals, America Movil said.
Company officials said at an investors day event in October that after a number of transactions, including the TracFone sale, the company would reduce its net debt to EBITDA ratio and be able to expand shareholder distributions in the coming years.
Share buybacks in 2021 alone would be higher than in the past five years combined, officials said.
The U.S. Federal Communications Commission on Monday approved Verizon’s acquisition of TracFone with conditions to protect low-income consumers.
The FCC said required conditions will protect low-income consumers from price increases and require the company to continue to participate in a low-income telecommunications subsidy program called Lifeline.
The agency will require an internal and an independent compliance officer “empowered to proactively monitor conditions, ensure that low-income consumers are not being harmed, and facilitate consumer complaints about potential violations.”
Verizon is the largest U.S. wireless carrier by subscribers. TracFone serves more than 20 million customers.
So far this year, America Movil has spent more than 31.4 billion pesos ($1.48 billion) on buybacks, according to stock exchange filings.
On Monday, it announced an increase of 26 billion pesos ($1.22 billion) in the balance of its buyback fund for the period of April 2021 to April 2022.
Source: Reuters.com