AT&T will support Straight Talk prepaid service

Wal-Mart will sell TracFone's Straight Talk service with phones that run on AT&T Mobility's (NYSE:T) network, a sign that AT&T is getting further enmeshed in the prepaid wireless business.  This means that Straight Talk, which so far has only be available over Verizon's CDMA network, will now be offered on AT&T's GSM network and Straight Talk consumers will have a choice of two GSM handsets when they purchase the service.

AT&T spokesman Mark Siegel confirmed the carrier will support Straight Talk service. A Wal-Mart spokesman did not immediately respond to a request for comment. The news that Wal-Mart will sell AT&T Straight Talk phones was first reported by BTIG analyst Walter Piecyk.

The move further underscores both the growth of the prepaid sector and AT&T's rivalry with Verizon Wireless (NYSE:VZ); Verizon was the first carrier to provide service for TracFone's Straight Talk service. Straight Talk offers a range of prepaid unlimited plans, including a $45 plan with unlimited voice, texting and data.  

Piecyk said in a research note that the expansion of Straight Talk to AT&T "could be bad news for Verizon, which has been relying on the growth in Straight Talk revenue to offset accelerating declines in their prepaid business." In the second quarter Verizon added 896,000 reseller subscribers, a large part of its 1.4 million net subscriber gains.

Indeed, perhaps in a nod to the growing importance of prepaid, last week Verizon confirmed it is testing a $50 prepaid monthly unlimited plan across the Southeast. 

As Piecyk noted, AT&T has a long-standing relationship with America Movil, the parent company of TracFone. AT&T owns a $7.5 billion stake in the company, which is owned by billionaire Carlos Slim. AT&T also provides the network for TracFone's traditional prepaid business, which is sold under brands including Net10.  In addition, by offering Straight Talk over AT&T's GSM network, TracFone will be able to offer GSM handsets, which are typically less costly than CDMA handsets.

For more:
- see this Dow Jones Newswires article (sub. req.)
- see this BTIG research note (sub. req.)

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