NEW YORK (Reuters) – An influential analyst called Amazon.com’s reported interest in the US wireless market is “batshit crazy.” Another said that it was a “trojan horse” to kill off the big wireless players.
FILE PHOTO: A logo of the upcoming mobile standard 5G is pictured at the Hannover messe in Hannover, Germany 31 March 2019. REUTERS/Fabian Bimmer
What is clear to the people who are tracking the company is the ambition of the world’s largest online retailer go much further than replacing your phone service.
Amazon is interested in acquiring Boost Mobile, which will be sold by the US wireless carriers T-Mobile US Inc and Sprint Corp as part of plans to win approval of the proposed $26.5 billion merger, mainly because it is a purchase of a six-year contract that the access to the combined company with the wireless network, Reuters reported on Thursday, citing a source familiar with the matter.
The ambition signaled that Amazon is looking to dive deeper into the wireless industry, the strengthening of the cloud services and, ultimately, to take advantage of the next-generation 5G networks are expected to transform key aspects of the technique, according to analysts.
That means that the tech giant, which has evolved from a pure bookseller to a superstore of physical and digital products, the look at the take of the carriers such as AT&T Inc and strengthen itself against rival cloud providers like Microsoft.
Amazon does not directly respond to a request for comment.
Shares of Verizon Communications Inc and AT&T closed more than 4% on Friday.
The market is assuming Amazon wants to be a wireless carrier itself, “but that thinking is too small,” said Colby Synesael, an analyst at Cowen. Amazon’s larger motivation might be that it expects 5G to be integral to cloud services in the future for sectors such as health and cars, which make use of 5G devices, ” he said.
These devices connect to Amazon’s cloud, which will store the data. If Amazon can both the wireless network and in the cloud, it can sell the full suite of products for customers who want to build 5G services, which would give you an advantage over competing cloud providers, ” he said.
Barclays analyst Kannan Venkateshwar also saw a great opportunity for Amazon. “In a 5G world, the ability of wireless to Amazon could include everything from the management of warehouses … to the reduction of churn on Prime,” he said in a research note to clients on Friday. Prime is Amazon’s paid subscription service which includes free delivery and access to streaming music and video.
Amazon has dabbled in this arena before. A 2014 attempt to take on Apple’s iPhone with the Fire Phone failed, but a year later. In 2007 Amazon launched its free Whispernet 3G wireless service with the first Kindle reading device that allows readers to download books over the air. Last month Amazon announced the launch of more than 3,000 satellites to provide internet access to rural areas around the world.
If Amazon decides to compete as a more traditional wireless carrier, “the impact for the wireless carriers, particularly Verizon and AT&T would be bleak,” said Jonathan Chaplin, an analyst at New Street Research. “They are happy to accept losses for the year to end up with a private market,” he said.
FILE PHOTO: The logo of Amazon is seen in the company’s logistics centre in Boves, France, 13 May 2019. REUTERS/Pascal Rossignol
Craig Moffett of MoffettNathanson, the analyst, the name of the idea of Amazon’s desire to enter wireless “batshit crazy,” said the prospect of Amazon want to “manage their own network for such purposes is economically insane.”
The enormous costs of attempting to build a national network would be an obstacle, ” he said, noting that Verizon and AT&T have each spent a number of $120 billion on their networks in the last ten years alone.
T-Mobile and Sprint and a series of concessions last week, including to sell, to Promote, is to get approval for the merger. The Federal Communications Commission has given the green light, the deal still needs the approval of the U.S. Department of Justice.
Reporting by Angela Moon and Sheila Dang; editing by Kenneth Li and Leslie Adler