MobileX wins major prepaid points with Walmart deal — Entner

Roger Entner

The world’s largest retailer created a unique partnership with Peter Adderton’s MobileX, making the new mobile provider an instant player in the prepaid business.

Walmart is the largest distribution channel for prepaid in the United States. At a minimum, due to its unique partnership, one would expect that MobileX will get appropriate exposure in Walmart stores and placement on Walmart+.

MobileX comes in two flavors: It is using AI to create a personalized plan for every customer or they can sign up for a very competitively priced unlimited plan. The AI plan starts at $4.08 per month with 1 GB of high-speed data, making it the lowest priced plan in the market. The $14.88 5G high-speed data plan is aimed at Mint Mobile, whereas the $24.88 30 GB plan – including Canada and Mexico – is aimed at Straight Talk and Boost Infinite.

The rivalry between Amazon and Walmart is as intense as it gets. Both companies – one being the largest online retailer, the other the largest physical retailer – are colliding. Amazon pushes into physical stores with Whole Foods, Walmart pushes into online retail with Walmart+. Both are eying the mobile market as a market of critical importance.

After Amazon struck a deal with Dish for Boost Infinite for Prime customers, it was only a matter of time – two months to be exact – before Walmart struck back with its exclusive MobileX deal.

Furthermore, one can imagine that Walmart, as the largest prepaid retailer in the United States, needed to broaden its product portfolio. Walmart’s long-standing partner TracFone has languished ever since the legendary FJ Pollak got sick and passed away. Now that Verizon has acquired TracFone, things have gone from okay to worse. TracFone’s share has shrunk and Total, a brand that was launched in Walmart, has been repurposed to be a standalone brand with more than 2,000 retail stores.

Mint Mobile, another up and coming prepaid brand with more than 1.5 million customers, is being acquired by T-Mobile. Boost Mobile, due to Dish’s close relationship with Amazon, has a sudden onset of the bubonic plague in the eyes of the folks from Bentonville, Arkansas. This makes the prepaid market suddenly a consolidated market whereas Walmart is looking for a large number of independent choices for their customers to choose from.

Just in time, Australian maverick Peter Adderton enters the stage with a new way of offering wireless and creating a new choice that is not owned by one of the three mobile network operators. Getting an independent brand like MobileX is a smart move from Walmart as it gives its customers more choice and strengthens its bargaining position vis-à-vis all other partners.

Adderton rose to fame in the United States by launching Boost Mobile. While he sold Boost Mobile in the U.S. to Sprint, he kept Boost Mobile in Australia, where it is the largest MVNO. Being a loud and boisterous voice gives him an outsized social media presence and his operational chops give him the credibility to successfully launch another mobile brand – if he’s done it twice before, he can also do it a third time.

When scouring for hints in the press release the word “unique” stands out. Knowing the players in a market personally allows us to better understand the motivations and actions. Numbers and facts tell you some of the guard rails, but they don’t make decisions; people do with their idiosyncrasies and personal values.

I am finding it hard to believe that Adderton would give up exclusivity, even to Walmart, for a distribution partnership. Such an exclusive retail partnership created an almost 10 million subscriber Straight Talk brand and was the backbone for the remaining 11 million TracFone customers. I personally believe there is more to the story than what is in the press release, but only time will tell the exact terms of the deal between Walmart and MobileX.

With all three mobile network operators increasing prices for their legacy customers, with Verizon and T-Mobile even increasing headline prices, there is an opening for lower price options. The success of Charter and Comcast taking significant share in postpaid is a testament that price is the largest purchase decision factor. Not everyone is willing or able to pay $95 per month for a single line.

At the same time, not everyone lives in the Charter or Comcast territory or has persistent heartburn from past exposure to their customer service on the fixed side. This creates significant opening for independent fighter brands like MobileX, especially when they have the backing of a large retail organization like Walmart. Ninety percent of the U.S. population is within 10 miles of a Walmart store. It instantly solves the physical distribution problem that most wireless brands have as online is just not enough.

Despite a more than a decade push by the carriers, the share of online sales of wireless stubbornly stays below 20%. The percentage of online sales of mattresses is roughly twice as high. At the same time, physical retail is expensive, with the average store costing between $1 million and $2 million to open. When you multiply that by a thousand or more stores, you suddenly are talking about real money.

Roger Entner is the founder and analyst at Recon Analytics. He received an honorary doctor of science degree from Heriot-Watt University. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications. Follow Roger @rogerentner.

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