Buy AT&T Stock on the Amazon-Induced Weakness

While major wireless carriers have denied it, e-commerce and cloud computing giant Amazon (NASDAQ: AMZN) is reportedly considering adding a free or inexpensive wireless service plan onto its prime membership. Shares of AT (NYSE: T) have dropped since the news broke, although the stock has been weak for months. Since peaking in early April, AT stock has shed nearly 25% of its value.

First things first: If Amazon offers a wireless plan with Prime, it will be acting as a mobile virtual network operator, or MNVO. MNVOs buy capacity from wireless providers at wholesale prices and then resell them to customers.

MNVOs are a dime a dozen, and some are even owned and operated by the big wireless providers themselves. Prices are low, but you get what you pay for. There are usually more limits, and during periods of heavy usage, MNVOs can be deprioritized. They're a good deal for some, but not for all.

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Source Fool.com