• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Technology

How Amazon Could Put a Nationwide Wireless Network to Use

If it's willing to make the large investments needed, Jeff Bezos' firm could use a wireless network to not only strengthen Prime, but also its ad business and AWS.
By ERIC JHONSA
May 31, 2019 | 05:44 PM EDT
Stocks quotes in this article: DISH, AMZN, TMUS, S, T, CMCSA, CHTR, VZ, AMT, CCI, SBAC, AAPL, DIS

It's far from certain at this point that Amazon.com  (AMZN) will actually become a U.S. mobile carrier, and any major effort in this direction would undoubtedly be costly.

But it's hard to blame Amazon for exploring the idea, given how such a move could strengthen Amazon's ties with U.S. consumers as well as how asset sales tied to a potential T-Mobile US (TMUS) /Sprint (S) deal could present a unique opportunity to become a meaningful player in a U.S. mobile industry that hasn't seen a major new player emerge in a long time.

Not long after Bloomberg reported that T-Mobile and Sprint are offering to unload both Sprint's Boost Mobile prepaid wireless brand and certain spectrum assets to secure DOJ approval for their planned merger, Reuters reported that Amazon is thinking about buying Boost and "would also be interested in any wireless spectrum that could be divested." It added that Amazon is interested in Boost because a deal to buy it would enable the use of T-Mobile's wireless network for at least 6 years on a wholesale (MVNO) basis.

Comcast (CMCSA) and Charter (CHTR) , each of which currently provide MVNO services with the help of Verizon's (VZ) network, were previously reported to have interest in the spectrum T-Mobile and Sprint are willing to unload. However, Comcast said on Friday that it has no interest in the assets, and a source told CNBC the cable giant also isn't interested in Boost.

Continuing a longstanding trend of companies selling off on worries about Amazon encroaching on their turf, AT&T (T)  and Verizon each fell about 4% in Friday trading amid a 1.3% decline for the S&P 500. On the flip side, cell tower owners American Tower (AMT) , Crown Castle (CCI) and SBA Communications (SBAC) rallied.

It's worth keeping in mind here that not every report about Amazon looking to make a big splash in a market where it has little or no presence has been followed by Amazon actually making such a move.

Last fall, the company was reported to have bid for the 22 regional sports networks (RSNs) that Disney (DIS) had agreed to sell to get regulatory approval for its acquisition of much of Fox Networks. However, Amazon ultimately settled for a minority stake in one of those RSNs -- the YES Network, which has regional broadcast rights for New York Yankees and Brooklyn Nets games.

But if Amazon does actually acquire Boost Mobile, spectrum and multi-year MVNO rights from T-Mobile, there are plenty of uses that it could find for a nationwide wireless service, all while advertising it for free to its giant customer base. Possibilities include:

  1. Discounted service plans for Amazon Prime members. With Amazon a month removed from announcing it aims to make 1-day shipping the norm for Prime in the U.S. and elsewhere, the company seems eager to find new ways to grow Prime sign-ups, retention and engagement -- and by doing so, also grow Prime's long-term pricing power. In addition, buying a service such as Boost could strengthen Amazon's push to grow Prime sign-ups among lower-income consumers.
  2. The pre-installing of Amazon's apps on Android phones relying on its services (Apple  (AAPL) won't allow iPhone pre-installs). And for both iOS and Android devices, Amazon could exclude any data consumed by its apps from mobile data caps.
  3. Strengthening Amazon's U.S. ad business by obtaining additional user data that could be leveraged for ad targeting. At various times, Verizon and AT&T have both talked up their ability to leverage provided by their telecom and pay-TV services to grow online and mobile ad sales.
  4. IoT connectivity services for AWS clients. These could be bundled with AWS' existing services for deploying, managing and analyzing the data produced by IoT devices.

Judging by the company's reported interest in buying spectrum assets, Amazon is intrigued enough by the possibilities opened up from being a wireless service provider to want to eventually build its own network. This would represent a far more costly and capital-intensive strategy than simply being an MVNO, but also one that could position Amazon better for long-term success, given that it wouldn't have to pay a margin to T-Mobile or another carrier, nor be subject to their whims on pricing and other matters.

If Amazon went down this path, it's possible that the spectrum that T-Mobile and Sprint are offering to sell won't be enough for its needs; CNBC, it should be noted, said Comcast doesn't think the spectrum is enough to create a fourth nationwide carrier. But Amazon could pair these assets with some of those owned by a company like Dish Network (DISH) , which has amassed a giant spectrum hoard over the years.

Investing many billions to become a major U.S. mobile carrier would represent quite the gamble for Amazon. But this is, after all, a company that has invested many billions in a streaming video service that it chose to bundle with an online shipping service. Big bets founded on out-of-the-box thinking are very much the norm for Jeff Bezos & Co.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Action Alerts PLUS, which Jm Cramer co-manages as a charitable trust, was long AMZN, CMCSA, AAPL and DIS.

TAGS: Investing | Technology

More from Technology

The Charts Point to More Selling Ahead for 4 Former Tech Leaders

Ed Ponsi
Jul 1, 2022 10:00 AM EDT

Keep in mind that no matter how much a stock has fallen, it can always go lower, and it appears these four stocks could prove that point.

Want to Save Your Retirement Fund? Tune Out the Talking Heads

Jim Collins
Jun 30, 2022 3:14 PM EDT

The first half of this year has been ugly. But we could have seen what would happen to Netflix, Tesla and Meta...

Is Pinterest's CEO Change Good News? It Depends on How You Look at It

Eric Jhonsa
Jun 30, 2022 2:30 PM EDT

Plus, why a report about an Apple 5G modem setback sounds believable.

Barring a Major Recession, Some Chip Stocks Look Very Cheap Right Now

Eric Jhonsa
Jun 30, 2022 11:45 AM EDT

Many quality chip stocks now seem to be pricing in a massive downturn, rather than just a typical down-cycle.

Oracle Continues to Struggle to Make a Durable Low

Bruce Kamich
Jun 30, 2022 8:20 AM EDT

Let's review the charts and indicators.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:49 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    Stop Wishing, Hoping, and Praying and Take Control...
  • 07:59 PM EDT PAUL PRICE

    Very Good Quarterly Numbers From Bassett Furniture (BSET)

    Bassett Furniture blew right through analysts es...
  • 04:41 PM EDT PAUL PRICE

    First-Half Results - Putrid; Second Half Results - Likely to Be Much Better

    It's great that we're done with June. 2022 mark...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login