Confirmed: TracFone acquires Walmart Family Mobile from T-Mobile, deal estimated to cover 1.4M customers

Source: Flickr user Takashi Matsumoto

T-Mobile confirmed that it recently sold its Walmart Family Mobile business to TracFone, giving the prepaid service provider a massive presence in the world’s largest retailer. Terms of the deal were not disclosed.

TracFone claimed nearly 26 million subscribers last year in the U.S., Puerto Rico and U.S. Virgin Islands, and the Walmart Family Mobile brings an additional 1.4 million customers, according to Wave7 Research. The company is the largest MVNO in the U.S., selling phones on every major U.S. network.

TracFone now offers nearly a dozen brands including Net10 Wireless, Straight Talk and SafeLink Wireless, which provides services through the federally funded Universal Service Fund.

“The recent acquisition of Walmart Family Mobile and its 1.4M customers by TracFone gives that company dominant Walmart share and therefore the pole position for rural wireless,” Wave7 wrote in a recent note to subscribers. “Straight Talk already leads at Walmart, where TracFone brands Net10, Total Wireless, and TracFone are also sold.”

T-Mobile executives had previously hinted at the spin-off, saying in July that it had decided to sell Walmart Family Mobile to an unnamed wholesale partner.

Walmart Family Mobile launched in 2010 in an effort by the retailer to address the perception among consumers that prepaid services don't offer the best handsets or networks. The service is meant to complement the variety of prepaid services Walmart offers.

Walmart operates roughly 4,600 stores in the U.S., and has become a major retailer of wireless phones and services. And the acquisition of Walmart Family Mobile comes as brick-and-mortar stores have become a top priority in an increasingly competitive prepaid market. T-Mobile’s MetroPCS will open roughly 1,000 physical outlets this year, according to the carrier's executives. Wave7 reported that AT&T’s Cricket will launch 900 physical locations, and Sprint’s Boost Mobile is also adding more stores.

Those moves come as competition continues to heat up in a prepaid market that has become more lucrative for service providers. The gap between prepaid and postpaid ARPU has narrowed significantly over the last two years, spurring competition in a space that had previously been largely ignored been major U.S. carriers.

And physical retail has become an important weapon for service providers, according to Wave7.

“This continued flow of doors seems to be a major factor in determining which carriers are gaining adds and which are losing subscribers,” the firm noted.

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