Consolidation in the wireless industry is a positive, allowing companies to combine synergies and therefore put investments back into the marketplace, Cingular Wireless President and Chief Executive Stanley T. Sigman said. Speaking Thursday evening at a panel discussion about the wireless industry during the first day of RadioShack’s annual investor conference in Fort Worth, Texas, Sigman said Cingular invested money last year in developing new networks, products, services and more. The wireless carrier will make those investments again this year, he said.
Cingular Wireless was formed as a joint venture between what was once SBC Communications Inc., now AT&T Inc., and BellSouth Corp. The combination of Sprint PCS and Nextel Communications is going well in many areas, including from a company culture standpoint, said Sprint Nextel Chief Operating Officer Len J. Lauer. Still, there have been challenges during the integration, he said.
As for what consolidation in the wireless industry means for RadioShack, which sells Cingular and Sprint Nextel products in its stores, President and Chief Executive Jim Edmondson said it’s driving the need for the retailer to be more focused on market share gain and not “just riding the wave up.”
Sprint Nextel inked an 11-year deal with RadioShack last year because the retailer is an ideal distribution channel, with RadioShack’s employees knowing the company’s accessories and how to sell them, Lauer said.
From Cingular’s standpoint, RadioShack gives it an opportunity to eliminate “less productive distribution channels,” Sigman said.
Cingular signed a 10-year deal with RadioShack last year, replacing Verizon Wireless in the retailer’s stores.
Although company stores have a lower cost of acquiring customers, RadioShack is convenient for Cingular customers because it has so many stores and customers can shop there for more than just wireless products, Lauer said.
“It’s a higher cost of acquisition for wireless carriers, but it’s also an economical one,” he said. “We don’t think we could do all our distribution through company stores.”
Wireless sales account for about one-third of RadioShack’s total annual revenue.
The company’s annual investor conference continues Friday morning, when RadioShack will also release its fourth-quarter and full-year results.