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US telecom companies say not in talks with Amazon for wireless services

Published 06/02/2023, 09:06 AM
Updated 06/02/2023, 04:41 PM
© Reuters. FILE PHOTO: The logo of Amazon is seen at the company logistics centre in Boves, France, August 8, 2018. REUTERS/Pascal Rossignol/File Photo/File Photo
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(Reuters) -

Major U.S. wireless carriers on Friday said they not in talks with Amazon.com Inc (NASDAQ:AMZN) to offer low-cost wireless services to its Prime members.

Wireless shares fell Friday after 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 the partnerships, including a possible tie-up with Dish Network (NASDAQ:DISH).

"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.

AT&T (NYSE:T), Verizon (NYSE:VZ) and T-Mobile denied any talks. Dish did not respond to Reuters requests for comment.

"AT&T is not in discussions with Amazon to resell wireless services," a company spokesperson said. Verizon spokesperson the company "is not in negotiations with Amazon regarding the resale of (Verizon's) wireless network. Our company is always open to new and potential opportunities, but we have nothing to report at this time."

T-Mobile "said 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."

Several analysts said the online retail giant's entry could lead to major disruptions in the telecom space as it could 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 1.2%, while Verizon and AT&T fell more than 3% and T-Mobile fell 6.4%.

Brandon Nispel of KeyBanc Capital Markets said Dish Network, 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 were not likely to partner with Amazon as "they obviously don't want to change the status quo of the industry."

Dish's shares rose 17%. They also rallied in May after a Wall Street Journal report that Dish was in talks to sell its wireless plans through Amazon.

For Amazon, a deal could draw more customers to its Prime service at a time growth in key markets including the U.S. has plateaued.

© Reuters. FILE PHOTO: The logo of Amazon is seen at the company logistics centre in Boves, France, August 8, 2018. REUTERS/Pascal Rossignol/File Photo/File Photo

The company's revenue growth slowed to its lowest in at least 20 years in 2022 as businesses and consumers cut back on spending in a tough economy.

"Several possible benefits may accrue from such a move including improving Prime member retention rates, allowing it to slightly increase annual subscription costs and providing Amazon a direct channel to the lucrative multi-billion dollar market of selling and financing mobile phones," said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.

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