Telecom stocks fell on Friday on renewed reports about the e-commerce giant Amazon.com (AMZN) plans to sell mobile services in the United States through its Prime loyalty program. AT&T (t), Verizon connections (VZ) And T-Mobile US (TMUS) All slipped in the news, however dish network (Dish) and AMZN stock gained ground.
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A week ago, reports emerged that Amazon might partner with Dish TV. Those reports said that Dish will sell Boost Mobile Wireless prepaid plans through Amazon. Dish is a newcomer to the cordless phone market.
What’s New in Friday Reports, originally from bloomberg, is that Amazon can launch its own program through Prime. Also, Amazon may partner with other wireless carriers.
Furthermore, Amazon aims to have the lowest possible wholesale prices. Bloomberg said the e-commerce giant may offer wireless plans to Prime members for $10 a month or even free.
At RBC Capital, analyst Brad Erickson is skeptical the deal can go through.
“While the conceptual logic is clear since we have more principal members than total American households, we see barriers to this type of deal,” he said in a note to clients. “We’re grappling with where AMZN’s pricing leverage will come from versus the[wireless]carriers. Obviously, the carriers aren’t going to get into a deal that isn’t profitable. Moreover, AMZN’s contract with investors to structure some additional and even nonsensical deals for services through Prime wouldn’t have Meaning given the broader push to improve retailing in the United States.”
Lagging telecom stocks, AMZN shares gain
AMZN stock is up 1.5% to 124.61 while T stock is down 4.4% to 15.11 in today’s stock market. Meanwhile, VZ stock fell 4% to 34.30. Also, TMUS stock fell 7.8% to nearly 128. Dish stock rose 22% to 7.66.
With the exception of T-Mobile, carrier stocks have taken a hit this year amid slowing wireless revenue growth. However, AMZN stock is up 49%.
When reports of Amazon Dish surfaced a week ago, analysts said it could spell trouble for incumbents in the industry, depending on the structure.
“Amazon is currently selling wireless services from prepaid providers like Cricket (owned by AT&T), Simple Mobile and Tracfone (owned by Verizon) where Amazon will likely take a piece of the economy,” UBS analyst John Hudolek said in a note to clients. .
He added, “We believe this distribution agreement can help DISH attract subscribers but is unlikely to lead to a meaningful shift in industry competition absent attractive promotions for the handset. We believe the biggest risk to the industry is Amazon selling its wireless service.” “
Follow Reinhardt Krause on Twitter @employee For updates on 5G wireless networks, artificial intelligence, cybersecurity, and cloud computing.
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