Amazon can connect to cellular service. Here's what it could mean for you.

E-commerce giant Amazon (AMZN) would consider a free or discounted mobile service for its Prime members, which could impact its wireless service provider customers and shareholders.

Key Points to Remember

  • Amazon is reportedly exploring a cost-effective cellular service offering in partnership with a wireless service provider.
  • Telecom company stocks traded lower after the news.
  • Wireless service could be a way to
  • Amazon has made some unsuccessful forays into non-core business segments

Amazon and Mobile Service? How would that work?

Bloomberg said Amazon wants to provide the service using a mobile virtual network operator (MVNO) model, which means it can provide the service using the infrastructure of Amazon. 39;an existing wireless service provider. Google (GOOGL) currently offers an MVNO with its Google Fi Wireless service that runs on the T-Mobile network. Some features of Google's service are pay-per-phone plans and data offers for up to four people aimed at families.

Tech companies are increasingly looking to ways to diversify their product streams into non-core businesses to keep their core customers close to the platform. Apple (AAPL), for example, is venturing into consumer credit with products such as a high-yield savings account.

For Amazon, cheap mobile deals can close the service loop by providing ancillary cellular service to customers already using the company for entertainment (Amazon Prime Video, Audible, Music) and shopping needs.

Mixed bag for investors

It wouldn't be the first time Amazon's mobile service has sought to branch out from its core business after branching out into grocery delivery with the acquisition of Whole Foods and the ill-fated attempt to offer health services with the now defunct Amazon Care and Haven, the health insurance business with JPMorgan (JPM) and Berkshire Hathaway (BRK.A).

For investors, Amazon can grow its footprint in another industry and the MVNO model will allow low-cost entry into the wireless sector since it will use someone's infrastructure. other rather than creating your own.

Although Amazon is in talks with a few telcos to provide the network for its bid, shares of some of those stocks were down on the news.

Verizon (VZ) and AT & Shares of T Inc. (T) were down about 4% each while shares of T-Mobile Inc. (TMUS) fell about 6.7% at 12:30 p.m. AND. Amazon shares rose just over 1.5%, but Dish Network (DISH) shares soared over 20%.



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