Telecom stocks tumbled on Friday on renewed reports that e-commerce giant Amazon.com (AMZN) plans to sell mobile phone services in the U.S. through its Prime loyalty program. AT&T (T), Verizon Communications (VZ) and T-Mobile US (TMUS) all slipped on the news, but Dish Network (DISH) and AMZN stock gained ground.
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Reports that Amazon could partner with satellite TV broadcaster Dish surfaced a week ago. Dish is a newcomer to the wireless phone market.
What’s new in today’s reports, originally from Bloomberg, is that Amazon could launch its own program through Prime. Also, Amazon may partner with other wireless firms.
Further, Amazon aims to get the lowest possible wholesale prices. The e-commerce giant could offer Prime members wireless plans for $10 a month or even for free, Bloomberg said.
Telecom Stocks Laggards, AMZN Stock Gains
AMZN stock rose 1.8% to 125 while T stock fell 4.8% to near 15 on the stock market today. Meanwhile, VZ stock retreated 4.5% to near 34. Also, TMUS stock fell nearly 7% to 129.30. Dish stock advanced 9% to 6.85.
With the exception of T-Mobile, telecom stocks have been hard hit this year amid sluggish wireless revenue growth. AMZN stock, though, has gained 49%.
When reports of an Amazon-Dish surfaced a week ago, analysts said it could spell trouble for industry incumbents, depending on the structure.
“Amazon currently sells wireless services from prepaid providers like Cricket (AT&T-owned), Simple Mobile and Tracfone (Verizon-owned) where Amazon potentially takes a cut of the economics,” UBS analyst John Hodulik said in a note to clients.
He added: “We believe such a distribution agreement could help DISH drive subscribers but it is unlikely to drive a meaningful shift in industry competition absent attractive handset promotions. We believe a bigger risk for the industry would be Amazon selling its own branded wireless service.”
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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