Telecom stocks fall on report Amazon considers launching mobile service for Prime members

Key Points
  • Amazon is in talks with Verizon, Dish and T-Mobile about the possibility of launching a low-cost mobile service for Prime members, Bloomberg reported.
  • A mobile plan could serve as an attractive hook for Amazon to lure in more Prime subscribers.

In this article

Fire smartphone by
Krisztian Bocsi | Bloomberg | Getty Images

Amazon is in talks with several wireless carriers about launching a mobile service for Prime members, according to a report from Bloomberg.

The news sent shares of telecom stocks lower Friday. Verizon fell more than 3% in afternoon trading, while T-Mobile slid over 7%. AT&T's stock was down more than 3%. Dish shares surged more than 15%.

The e-retailer is negotiating with Verizon, T-Mobile and Dish about the possibility of reselling their mobile services to its Prime members at low cost or potentially free, Bloomberg reported. The discussions have been going on for six to eight weeks and have also included AT&T, but it could be several more months before a plan materializes, according to the report.

"We are always exploring adding even more benefits for Prime members, but don't have plans to add wireless at this time," Amazon spokesperson Bradley Mattinger said in a statement.

A T-Mobile spokesperson told CNBC in a statement: "Amazon is a great partner to T-Mobile in many areas, and we are always interested in working more closely with our cross-town neighbors in new ways. However, 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."

Verizon and AT&T said they're not in discussions with Amazon to resell wireless services. Dish representatives weren't immediately available to comment.

Amazon has previously experimented in the mobile category, launching its ill-fated Fire Phone in July 2014 before scrapping it a year later. More recently, it has focused on high-speed internet through its Kuiper program, which aims to build a network of 3,236 satellites in low Earth orbit.

A mobile plan could serve as an attractive hook for Amazon to lure in more Prime subscribers. Launched in 2005, Amazon Prime members pay $139 a year for access to free two-day shipping, access to exclusive movies and TV shows, as well as newer benefits like generic prescription discounts and Grubhub delivery perks.

Amazon has been looking for ways to attract more Prime members as it faces growing competition with Walmart's Walmart+ loyalty program, and concerns about slowing membership growth. The company had more than 200 million subscribers worldwide as of April 2021.

Mattinger said Prime membership has grown steadily year-over-year "as the value members receive continues to increase."

By partnering up with a company like Verizon or Dish, Amazon would essentially function as a mobile virtual network operator. Instead of owning its own wireless network, the company would purchase data from a large carrier and resell it to consumers.