US telecom stocks fall on report Amazon in talks for wireless services
Bloomberg News reported that Amazon was negotiating to get the lowest possible wholesale prices and could offer wireless plans for $10 a month or lower to Prime members through these partnerships.
“We are always exploring adding even more benefits for Prime members, but don’t have plans to add wireless at this time,” an Amazon spokesperson said in response to a Reuters query.
Several analysts said the online retail giant’s entry could lead to major disruption in the telecom space as its deep pockets would enable it to offer cheaper plans in a country with some of the highest wireless charges in the world.
“Amazon could certainly put a lot of its weight behind it and undercut competitors,” said Christopher Ali, professor of telecommunications at Penn State University. “We might actually see cell phone prices go down, which would be a great thing.”
Amazon’s shares rose more than 2% and were among the top boosts for the benchmark S&P 500 Index (.SOX), while Verizon, AT&T and T-Mobile fell between 3% and 8%.
AT&T declined to comment, while T-Mobile said it was not in discussions with Amazon for inclusion of its wireless in Prime service. Other telecom firms did not immediately respond to Reuters requests for comment.
The details of the potential deals between Amazon and the wireless carriers were not immediately known.
Brandon Nispel of KeyBanc Capital Markets said that Dish Network Corp (DISH.O), a relatively new entrant in wireless, could be the most likely partner for Amazon.
He said a deal would give Dish access to financing that could help build out its network, while the other carriers are not incentivized to partner with Amazon as “they obviously don’t want to change the current status quo of the industry.”
Dish’s shares were an outlier in telecom stocks with a gain of 22%. The company’s shares had also soared in May after a Wall Street Journal report that it was in talks to sell its wireless plans through Amazon.