US States Urge FCC To Review Verizon’s $6.3B Deal To Buy TracFone – Report

Verizon’s $6.3 billion proposed acquisition of TracFone could be up for scrutiny by US regulators, according to a Reuters report on Feb. 6.

According to Reuters, the attorneys general of 16 US states asked the Federal Communications Commission (FCC) to investigate Verizon’s (VZ) proposed deal. The US states include Colorado, Connecticut, Delaware, and the District of Columbia.

Verizon offered to buy TracFone, a unit of America Movil, in September last year. TracFone is a wireless services reseller that serves around 21 million subscribers through 90,000 retail locations in the US.

TracFone provides wireless services under the government benefit program in select US states and targets value and low-income segment users.

According to the attorneys general letter seen by Reuters, the FCC “should examine whether the acquisition of TracFone by Verizon could significantly reduce millions of Americans’ access to affordable communications services.”

Furthermore, the letter says, “it is imperative that the FCC thoroughly vet the proposed transaction and impose specific conditions that protect and ensure the public interest before considering approval.”

Verizon’s total wireless segment revenue rose 2.2% year-on-year to $16.7 billion during the fourth quarter in FY20. (See Verizon Communications stock analysis on TipRanks)

Late last month, following the company’s 4Q results, Oppenheimer analyst Timothy Horan assigned a Buy rating and a price target of $70 for the stock.

“VZ reported a mix quarter with revenue/subs missing our forecasts but beat on margins/profitability,” Horan commented in a note to investors. “Business/Media segments are improving as COVID-19 headwinds subside. The focus will be on FCF and the balance sheet; we think VZ will likely have to cut back on CAPX for redesigning its network.”

The rest of the Street has a Hold consensus rating on the stock. That’s based on 3 analysts recommending a Buy, 5 analysts suggesting a Hold and 1 analyst suggesting a Sell. The average analyst price target of $62.25 implies 12.5% upside potential to current levels. Shares of Verizon closed at $55.32 on Feb. 5.

According to the TipRanks Smart Score system, Verizon scores a 7 out of 10 indicating that the stock is likely to perform in line with market averages.

Related News:
Dialog Semiconductor In $6B Takeover Talks By Renesas Electronics
Magnite Snaps Up Video Ad Platform SpotX For $1.2B; Shares Pop 26%
AT&T Settles Dispute With Cox Media Group

Stay Ahead of Everyone Else

Get The Latest Stock News Alerts