Tracfone Wireless is acquiring Simple
Mobile in a deal that could help it kick off a SIM-only service to the U.S.
market.
Simple Mobile has more than 1 million
customers and runs on a SIM-only model – it doesn’t sell phones, but instead
sells prepaid SIM cards that can be used to activate about 200 different GSM
phones including the iPhone. It claims to be T-Mobile USA’s largest MVNO.
America Movil, Tracfone’s Mexico-based
parent company, issued few details about the transaction in its announcement
Thursday. It did not disclose how much it is paying for Simple Mobile, but said
it expected the deal to close this quarter.
The acquisition is “likely the
first step in a broadening strategy,” BTIG Research Analyst Walter Piecyk
said in a research note. “The move comes at an opportune time as unlimited pre-paid operators Leap
Wireless and MetroPCS are struggling with the rapidly rising costs of
smartphone subsidies and post-paid operators are cracking down on their
previously liberal upgrade policies.”
Piecyk pointed out that other CDMA
prepaid providers like Cricket, MetroPCS, Boost Mobile and Virgin Mobile USA
are precluded from competing with their own SIM-only service since CDMA phones
doesn’t use SIM cards.
H20 Wireless, an AT&T MVNO, also
offers SIM-only service but its plans are less competitive than Simple
Mobile’s.
Tracone, a U.S. subsidiary of Mexico’s
America Movil, claims to be the largest prepaid provider in the country with
19.8 million subscribers. It sells prepaid wireless debit cards and low-cost
handsets at gas stations, big box stores, pharmacies and other retailers.
The Simple Mobile announcement came just
days after America Movil made a bid for Dutch wireless provider Royal KPN NV.
America Movil is owned by Carlos Slim,
ranked by Forbes as the world’s richest man with a net worth of $69 billion as
of March 2012. The Mexican government fined the telecommunications giant $1
billion last year for monopolistic practices, but revoked the penalty this
week.
