Android smartphones on TracFone's flat-rate Straight Talk service will be using Sprint Nextel's (NYSE:S) network, a Sprint spokesman confirmed.
Samsung Galaxy Precedent
Sprint spokesman John Votava told FierceWireless that Sprint will be the underlying network for Straight Talk's current Android device, the Samsung Galaxy Precedent, as well as future Straight Talk Android devices. Votava declined to discuss details of Sprint's wholesale arrangement with TracFone, which is owned by América Móvil. The deal was first noted by BTIG analyst Walter Piecyk.
The wholesale arrangement means that Straight Talk is now being offered wholesale through all four Tier 1 carriers. Previously, it was supported by Verizon Wireless (NYSE:VZ), AT&T (NYSE:T), and T-Mobile USA's networks, though it appears Sprint has won an exclusive relationship to power Straight Talk's smartphones. TracFone's Straight Talk brand is primarily sold through Wal-Mart.
Last month Straight Talk began offering its first smartphone running Google's (NASDAQ:GOOG) Android platform, the Samsung Galaxy Precedent, for $150. The smartphone is strikingly similar to the Samsung Prevail, which Sprint's prepaid brand Boost Mobile sells for $180. The Precedent runs Android 2.2, has a 3.2-inch touchscreen display and a 2-megapixel camera.
In a blog post, Piecyk said that investors are likely to be pleased with Sprint's ability to add TracFone as a wholesale customer. "Sprint is a company in search of revenue to leverage its fixed costs and América Móvil can deliver high volume to any network operator," Piecyk wrote. "Sprint's wireless EBITDA margins have dropped to 16 percent and are likely to fall further as a result of its network modernization program and increased smartphone sales. With margins that low, they were likely more motivated to offer aggressive pricing than Verizon or AT&T, which both have margins in excess of 40 percent. It is certainly possible that Straight Talk will expand its Android service offerings to more network operators, like it did over the past two years after initially launching Straight Talk with Verizon."
- see this BTIG blog post (reg. req.)
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