Tracfone Overview

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Company Overview - Tracfone

TracFone was founded in 1996 as Topp Telecom, Inc and offers prepaid wireless services in the US.

TracFone Wireless History

  • TracFone Wireless was founded in Miami, Florida in 1996 and is a subsidiary of América Móvil, the biggest telecommunication company in Mexico.
  • The company was initially established with the name Topp Telecom, Inc. In 1999, TelMex bought 55% controlling interest in the telecommunication company for $57.5 million.
  • TelMex cut off its mobile unit to create América Móvil and Topp Telecom became a subsidiary of América Móvil in 2000. Topp Telecom was renamed TracFone in the same year.

What TracFone Does

  • TracFone offers prepaid wireless phone services. They offer prepaid call and data plans with their nationwide 4G LTE coverage.
  • Customers can easily buy a SIM card from TracFone, purchase a service plan, and access their call, text, and data services. TracFone's prepaid services are provided through the Verizon, T-Mobile, and AT&T network.
  • TracFone also provides free mobile phone data, text, and call services to eligible customers as determined by each state in the US through its SafeLink brand. The eligibility requirements are determined by each state and are "based on a person’s participation in state, Federal support programs, or by meeting the Income Poverty Guidelines as defined by the U.S. Government. SafeLink Wireless service is limited to one person per household."
  • TracFone provides subsidized smartphones to low-income Americans. They also carry all kinds of phones and prospective customers who prefer to keep their phones and have an unlocked phone can also use their services.
  • TracFone also provides phone insurance services that insure the customer's phone against damage, screen crack, theft, or loss.

Services and Products

Value Proposition

  • TracFone's main value proposition is that it offers customers complete freedom devoid of contracts, activation fees, or cancellation fees. Customers can join or leave at their own volition without paying any penalty.
  • They also have something for everyone, carrying low-cost Android phones to well-known luxury brands such as iPhones and Samsung. They also have affordable airtime and service plans.

C-Suite Executives

  • Eduardo Diaz Corona is the Chief AMX Coordinating Officer at TracFone Wireless.
  • Sergio Rivera is the VP Product Engineering at TracFone Wireless.
  • Kelvin Cui is the Vice President of Finance at TracFone Wireless.
  • John Salyers is the SVP, Sales at TracFone Wireless.
  • Richard Salzman is the Executive Vice President and General Counsel of TracFone Wireless.
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Tracfone - Strategies

Information surrounding the strategies behind the purchases of mobile companies by Tracfone shows that its acquisition strategies are geared towards expanding its retail presence, reaching rural communities, broadening distribution channels, and acquiring new subscribers. The company's strategic vision is about being the fastest growing and preserving its leadership in the telecommunication industry.

TracFone's Acquisition Strategy

Expanding Retail Presence

Reaching Rural Communities

  • Another key information gleaned from TracFone's acquisition of Walmart Family Mobile is that the company is keen on expanding its presence in rural areas in line with its vision to provide services to low-income Americans.
  • According to industry analysts, TracFone's acquisition of Walmart Family Mobile gives the "company dominant Walmart share and therefore the pole position for rural wireless."

Broadening Distribution Channels

  • TracFone acquired Simple Mobile in 2012 and a key reason for the acquisition was to broaden its service delivery channels.
  • An industry analyst at the time of purchase stated that "the acquisition will add important new distribution channels for América Móvil and is likely the first step in a broadening strategy."

Acquiring New Customers

  • TracFone's purchase of mobile companies is also geared towards increasing its customer base in the US.
  • For instance, its acquisition of Walmart Family Mobile and Simple Mobile gave it an additional 1.4 million and 1 million subscribers respectively.

TracFone's Public Vision

  • TracFone's strategic vision is anchored on that of América Móvil, its parent company.
  • The strategic vision is to be the telecommunication company "with the fastest growth and preserve its leadership in the industry of telecommunications."
  • They are also focused on ensuring that the entire US population, including low-income earners, can access its products and services with the most advanced telecommunication technology and at affordable prices.

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Tracfone - Standout Selling Points, Offerings

Tracfone's most standout selling points and/or offerings include no-contract services, affordable phone service rates, and nationwide coverage anchored on the best telecommunication technology and network in the US.

TracFone's Selling Point

No Contracts

  • Unlike other telecommunication companies offering talk, text, and data services, TracFone doesn't tie customers to a contract.
  • There is no activation or cancellation fee and users can simply buy a sim card, purchase airtime, and/or subscribe to a plan. If they choose to stop using the service, there is no cancellation fee and they can simply switch to another service provider on their phone.

Cheap Service Rates and Phones

  • TracFone's on inception started by targeting low-income Americans by providing very affordable Android phones as well as affordable airtime and still do today.
  • They offer plans of between $20 and $30.
  • TracFone offers 500 minutes for $10 and 3 gigabytes of data for the same price.
  • The company offers an annual plan of "1,200 minutes, 1,200 text messages and 3GB of 4G LTE data for $49.99," and customers can top-up easily if required. The add-on cards don't expire and roll over each month as long as the plan is active.
  • Competitors such as Red Pocket Mobile that also offer affordable services are generally more expensive than TracFone. Red Pocket Mobile also has limitations such as lack of support for MMS/picture messages on iPhones on AT&T's network that TracFone doesn't have.

Nationwide Coverage on National Carriers

  • TracFone's offerings are available nationwide through AT&T, T-Mobile, and Verizon networks. These are the biggest telecommunication service providers in the US known for excellent coverage and technology, making it easier for them to gain customer trust.
  • Customers can choose between any of the three providers, giving customers more options and freedom.
  • Customers of Verizon, AT&T, and T-Mobile can easily switch to Tracfone and are generally able to keep their phone, phone number, and network. Seamless and hassle-free switching are also key selling points for TracFone.

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Tracfone - Main Brands

Some of TracFone's main brands include Straight Talk, SafeLink Wireless, Simple Mobile, Walmart Family Mobile, and NET10 Wireless.

TracFone Main Brands

Straight Talk

  • Straight Talk is TracFone's main brand and provides wireless telephone services to customers in the US.
  • They offer unlimited talk, data, and text services in partnership with AT&T, T-Mobile, and Verizon networks. They also provide affordable android phones as well as phones from popular brands to its customers.
  • The total number of Straight Talk's subscribers at the end of 2019 was 9.382 million, representing 44.94% of TracFone's 20.876 million subscribers (9.382/20.876 * 100).
  • TracFone doesn't publicly report revenue for each of its brands separately but the total revenue TracFone generated in 2019 was $8.09 billion. If we assume that TracFone's subscribers were proportional to its revenue, it would mean that Straight Talk accounted for about $3.64 billion (44.94% * $8.09 billion) of the overall 8.09 billion in revenue generated by TracFone.

SafeLink Wireless

  • SafeLink Wireless provides eligible customers with smartphones or SIM Card as well as free minutes, data and texts monthly.
  • The eligibility requirements are determined by each state and are "based on a person’s participation in state, Federal support programs, or by meeting the Income Poverty Guidelines as defined by the U.S. Government. SafeLink Wireless service is limited to one person per household."
  • The total number of SafeLink's subscribers at the end of 2019 was 2.173 million, representing 10.41% of TracFone's 20.876 million subscribers (2.173/20.876 * 100).
  • TracFone doesn't publicly report revenue for each of its brands separately but the total revenue TracFone generated in 2019 was $8.09 billion. If we assume that TracFone's subscribers were proportional to its revenue, it would mean that SafeLink accounted for about $842.17 million (10.41% * $8.09 billion) of the overall 8.09 billion in revenue generated by TracFone.

Simple Mobile

  • Simple Mobile provides no-contract wireless cell phone plans to customers on T-Mobile’s network.
  • They offer talk, texts, and data both nationwide and internationally. Calls to Mexico incurs no roaming charges on Simple Mobile.
  • TracFone only reveals subscribers number for SafeLink and Straight Talk and categorizes subscribers from other brands in the US as "others". In 2019, the total subscribers of TracFone's "other" brands (apart from SafeLink and Straight Talk) were 9.321 million.
  • TracFone acquired Simple Mobile in 2012 and revealed at the time that Simple Mobile had 1 million subscribers. A recent estimate is that Simple Mobile has about 2.5 million subscribers, which would represent about 11.98% of TracFone's 20.876 million subscribers (2.5 million/20.876 million * 100).
  • TracFone doesn't publicly report revenue for each of its brands separately but the total revenue TracFone generated in 2019 was $8.09 billion. If we assume that TracFone's subscribers were proportional to its revenue, it would mean that Simple Mobile accounted for about $969.18 million (11.98% * $8.09 billion) of the overall 8.09 billion in revenue generated by TracFone.

Walmart Family Mobile

  • Walmart Family Mobile is one of TracFone's brands that offers unlimited talk and text plans with 4G LTE data powered by T-Mobile.
  • The plan can easily be gotten from Walmart stores nationwide and starts at $25 a month. It is a no-contract wireless service and customers are not bound by a contract.
  • TracFone only reveals subscribers number for SafeLink and Straight Talk and categories subscribers from other brands in the US as "others". In 2019, the total subscribers of TracFone's "other" brands (apart from SafeLink and Straight Talk) were 9.321 million.
  • The most recent estimate available states that Simple Mobile has about 1.4 million subscribers, which would represent about 6.71% of TracFone's 20.876 million subscribers (1.4 million/20.876 million * 100).
  • TracFone doesn't publicly report revenue for each of its brands separately but the total revenue TracFone generated in 2019 was $8.09 billion. If we assume that TracFone's subscribers were proportional to its revenue, it would mean that Walmart Family Mobile accounted for about $542.84 million (11.98% * $8.09 billion) of the overall 8.09 billion in revenue generated by TracFone.

NET10 Wireless

  • NET10 Wireless offers affordable, no-contract wireless call, text, and 4G LTE data services to customers in the US. Customers can either buy new smartphones from the company or bring their own device to connect to the network.
  • NET10 Wireless operates on AT&T, T-Mobile, and Verizon networks.
  • TracFone only reveals subscribers number for SafeLink and Straight Talk and categorizes subscribers from other brands in the US as "others". In 2019, the total subscribers of TracFone's "other" brands (apart from SafeLink and Straight Talk) were 9.321 million.
  • However, the most recent estimate available states that NET10 Wireless has about 3 million subscribers, which would represent about 14.37% of TracFone's 20.876 million subscribers (3 million/20.876 million * 100).
  • TracFone doesn't publicly report revenue for each of its brands separately but the total revenue TracFone generated in 2019 was $8.09 billion. If we assume that TracFone's subscribers were proportional to its revenue, it would mean that NET10 Wireless accounted for about $1.16 billion (14.37% * $8.09 billion) of the overall 8.09 billion in revenue generated by TracFone.

Research Strategy

We were able to find most of the required information by searching TracFone's annual report, media databases, and industry sources, however, searches in these sources didn't reveal revenue information for each of TracFone's brands. Only information on TracFone's general revenue was available.

Given that the requested data wasn't available in the above sources, we also searched for revenue information of each brand on América Móvil's database, the parent company of TracFone. Unfortunately, America Movil only provided revenue information about TracFone and subscribers information for Straight Talk and SafeLink, and nothing for the various other brands under TracFone.

We also looked for brand revenue information on databases such as Manta and Zoominfo that normally provides revenue estimates for various companies. While those sources did provide revenue estimates for the various brands, our analysis suggested that the estimates provided on those sources were too unreliable, For instance, Zoominfo estimates that the revenue from Straight Talk is just $33 million. This is highly unlikely given that official information provided by the company shows that Straight Talk is the TracFone's biggest brand with almost half of its total subscribers. Hence, it is unlikely that Straight Talk would account for revenue of just $33 million when TracFone has a revenue of over $8 billion.

Given that we were unable to find revenue information, we decided to triangulate revenue data using the number of subscribers as detailed above.
Part
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Tracfone - Media Spend

TracFone's verified media spend was $242 million in 2017.

TracFone Media Spend

  • TracFone is the US subsidiary of América Móvil, and its total measured media advertising spending in 2017 was $242 million.
  • The data above is based on verified "spending in 19 media: consumer magazines, Sunday magazines, local magazines, business-to-business magazines, local newspapers, national newspapers, free-standing inserts, broadcast network TV, broadcast spot TV, national syndicated TV, network cable TV, network radio, national spot radio, local radio, Spanish-language media (magazines, newspapers, TV networks), outdoor and internet (display advertising; excludes paid search, video and other forms of internet advertising)."
  • TracFone Wireless spent $12.7 million advertising one of its brands, Straight Talk Wireless, in September 2016.
  • Data on media spend per channel was unavailable.
Sources
Sources