Amazon entering wireless mobile business would be ‘economically insane’, says analyst

Amazon.com Inc. is famous for its appetite for entering new markets. But a report that it’s considering a foray into the wireless industry was a bridge too far for one Wall Street analyst.

The world’s largest online retailer is interested in purchasing prepaid wireless phone service Boost Mobile from Sprint Corp. and T-Mobile US Inc., Reuters said late Thursday, citing people familiar with the matter.

“Every once in a while, a news item comes along that is so batshit crazy – sorry for the profanity, but your author is at a loss for a better word here – that one is simply brought up short,” Moffett Nathanson’s Craig Moffett wrote in a Friday research note.

T-Mobile and Sprint are considering the sale of some airwaves to win Justice Department approval of their proposed merger. Amazon would also be interested in any wireless spectrum that would be divested, Reuters reported.

“Amazon may harbor long-term visions of wirelessly piloted delivery drones and driverless delivery vehicles, but the idea that one would want to operate their own proprietary network for such purposes is economically insane,” said Moffett, who has 30 years of experience in the telecom business.

Amazon does lease proprietary undersea cables and long-haul facilities, as do many other companies, but that’s a far cry from operating a full-coverage network, Moffett explained.

“Networks must, out of economic necessity, be open to all comers,” he wrote. So running your own wireless network to gain a competitive advantage in another business, like drone delivery or autonomous delivery trucks, “is a fool’s errand,” he wrote.

Amazon India