August 2, 2005

Cingular Wireless managed to wrestle away a major distribution point from smaller, but faster-growing rival Verizon Wireless as RadioShack announced a 10-year agreement to begin selling Cingular products and services early next year, and to stop selling Verizon Wireless products and services at the end of this year.

Along with the Cingular deal, RadioShack also signed an 11- year pact to continue selling Sprint Corp. wireless products and services.

Financial terms of the agreements were not released, though RadioShack said it expected the deals to be more financially favorable over the life of the agreements compared with its current agreements.

"We believe these new agreements will help RadioShack secure a larger share of the increasing value of the wireless industry," said David Edmondson, president and chief executive officer of RadioShack.

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Cingular noted that RadioShack would offer its full range of postpaid products, as well as its GoPhone prepaid services.

The new agreements also will expand RadioShack's technology offering, as the retailer will offer CDMA services from Sprint, GSM services from Cingular and iDEN technology through Sprint's pending acquisition of Nextel Communications Inc.

"After assessing the market place, the technology roadmaps of each carrier and each carrier's value proposition as it relates to our customer base, we decided it was imperative to introduce a GSM carrier to remain competitive," Edmondson explained.

"Cingular was our GSM choice as they are the largest wireless carrier in the U.S. This, coupled with the new customers that the Sprint/Nextel merger is expected to bring us, helped guide our wireless partner selection."

Verizon Wireless announced its original distribution deal with RadioShack in mid-2001.

Verizon Wireless announced an exclusive agreement last year with Circuit City Superstores to operate a store-within-a-store concept at more than 570 Circuit City locations across the country. As part of the agreement, Circuit City stopped selling T-Mobile USA Inc. products and services.

Sprint's new agreement with RadioShack builds on a previous 10-year deal signed in 1996 that included exclusivity in selling postpaid wireless services until the Verizon Wireless agreement with RadioShack in 2001 and provided Sprint with at least 15 percent of RadioShack's retail floor space. RadioShack continues to offer prepaid services from Tracfone Wireless Inc.

Analysts noted in 2001 that RadioShack at one time accounted for nearly one-fourth of gross subscriber additions for both Sprint and Verizon Wireless. But in recent years, RadioShack has seen wireless sales slip as carriers have expanded their indirect retail footprints and increased their direct-marketing efforts.

Source: RCR News