T-Mobile USA said today that it would begin selling its a prepaid phone and service through discount retailer Family Dollar Stores as the carrier continues to move deeper into the prepaid business.
Family Dollar, which runs 6,000 locations, is the second retail chain to announce a partnership with T-Mobile after 7-Eleven. Both are meant to serve as a replacement for RadioShack, which plans to stop selling T-Mobile service and switch to Verizon Wireless next month.
The demographics of the typical 7-Eleven and Family Dollar customer suggest the company is going after the low-end prepaid market, competing against the likes of Tracfone. It's a big change from its presence at RadioShack, where the electronics retailers would sell more higher end contract services.
"T-Mobile is excited to work with Family Dollar to offer an affordable prepaid device to its customers who seek value and convenience when shopping," said Amy McCune, vice president of national retail for T-Mobile USA
As with the 7-Eleven partnership, T-Mobile will sell its prepaid handset, the GS170 from LG Electronics, which is a basic flip cell phone that costs $30.
T-Mobile said customers can sign up for its no-contract service plan, including a $50-per-month plan with unlimited phone calls, text messages and Internet access with 100 megabytes of data.
Family Dollar, meanwhile, will push T-Mobile's products and other wireless offerings with special displays place in front of each store. The retail chain will offer in-store promotions and marketing as well.
T-Mobile's recent strategy suggests the carrier has all but given up on the contract customer segment. All of its phones and plans have a no-contract option, and its recent financial results indicate that its competitive position among contract customers has weakened. In the second quarter, it lost 281,000 net contract customers, but gained 231,000 net prepaid customers.
Analysts saw the loss of the RadioShack partnership has a blow to T-Mobile, but the carrier insists that it decided to stop the relationship.
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