Jun 2, 2023 - Economy

Report of Amazon weighing mobile market entry sends telecom stocks flying

An Amazon logo with a shadow of a man looking at his phone.

Photo: Jaap Arriens/NurPhoto via Getty Images

Shares of major telecoms reacted after a Bloomberg report suggested Amazon is talking to the wireless carriers about entering the mobile market as a reseller to boost Prime membership perks.

What they're saying: "We are always exploring adding even more benefits for Prime members, but don’t have plans to add wireless at this time," Bradley Mattinger, an Amazon spokesperson, tells Axios in a statement.

Catch up quick: The report said Amazon is negotiating with Verizon, T-Mobile and Dish about possibly reselling their mobile services at a low cost, or even potentially offering free plans, to Prime subscribers.

  • The talks reportedly involve Amazon becoming a mobile virtual network operator, which means it could pay for use of an existing telecom's mobile infrastructure network to launch its own plans.

The intrigue: Such a deal could be enticing for a telecom to consider, as Amazon would pay wholesale rates in exchange for bulk access to a provider's network services. That's dependable revenue.

  • But it could also ignite a price war, or lead to customers leaving their current carriers to sign up for Amazon plans.

Of note: Verizon Communications shares closed down 3.2%, while T-Mobile fell 5.6%.

  • Dish shares closed up 16.2%, as investors viewed a potential deal as a boon for the company as it tries to scale up in the space.

What others are saying: "We are not in discussions about inclusion of our wireless in Prime service, and Amazon has told us they have no plans to add wireless service," T-Mobile said in a statement. Verizon and AT&T issued similar statements.

The big picture: Amazon's Prime membership is facing growing competition from Walmart's subscription loyalty service, Walmart+.

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