The Shack is getting its own phone. Electronics retailer RadioShack is rolling out a branded, prepaid wireless service powered by
mobile provider Cricket Communications.
The new line of no-contract smartphones and feature phones will be available at RadioShack stores nationwide starting Wednesday. The new service, dubbed RadioShack No-Contract Wireless, will launch with a pair of devices from China's Huawei Technologies -- the Android-based Mercury Ice, selling for $149, and the $39.99 Pillar cell phone.
The market for prepaid phones has expanded in recent years as consumers have turned to simpler, lower-cost mobile options in a weak economy. Sales of prepaid phones, for example, increased 12% in the second quarter, while those for phones requiring contracts were flat, according to mobile consulting firm Chetan Sharma.
By getting directly into the growing no-contract phone business, RadioShack aims to help reverse worsening financial results and better compete with online retailers like Amazon, which are making inroads on brick-and-mortar businesses. RadioShack reported an unexpected second-quarter loss of 21 cents a share and suspended its dividend after 25 years of payouts.
As part of its increased focus on selling wireless phones and calling plans, RadioShack already sells prepaid phones from the major U.S. carriers, including Sprint, Verizon and AT&T.
For its own branded devices, the retailer will offer a $25 plan with 300 voice minutes and unlimited text messaging and Web access for feature phones. The cost rises to $35 for a 1,000-minute plan.
Smartphone plans start at $50 a month and includes unlimited voice and data (up to 1GB before download speed is throttled), Cricket's Muve Music service and unlimited U.S. texting. A $60 plan offers the same, but with unlimited international texting and data at full speed up to 2.5GB.
Cricket owner Leap Wireless, which also struggled in the second quarter, gains a foothold in RadioShack's more than 4,400 stores through the deal. Guggenheim Partners analyst Shing Yin said the deal was structured to avoid riling the retailer's existing prepaid carrier partners by using RadioShack's brand instead of Cricket's, according to The Wall Street Journal.