Rumors that DISH Network is in talks to sell wireless plans for its new mobile phone service on Amazon.com sent shares of the pay-TV company higher this week, but investors should take heed, analysts say.
Implications of a potential DISH distribution agreement with Amazon will depend on details, according to brokers at UBS.
According to a report in the Wall Street Journal, details of the new plans could be announced as soon as June, but the financial details of the deal were not disclosed.
UBS noted that the arrangement looks to be a distribution agreement, where DISH’s wireless plans are sold through Amazon.
Amazon currently sells wireless services from prepaid providers like Cricket (AT&T), Simple Mobile and Tracfone (VZ) where Amazon potentially takes a cut of the economics.
“We believe such a distribution agreement could help DISH drive subscribers but it is unlikely to drive a meaningful shift in industry competition absent attractive handset promotions,” analysts wrote in a note.
“We believe a bigger risk for the industry (or positive for DISH) would be Amazon selling its own branded wireless service on DISH’s network or Amazon integrating DISH plans into its Prime memberships, but this does not appear to be the case based on the press article.”
Shares of DISH gained 10% off the back of the reports earlier this week.
However, its stock has plunged more than 52% in the year to date.
Contact Angela at angela@proactiveinvestors.com
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