Copyright 2009 Little Rock Newspapers, Inc.

October 15, 2009 Thursday

BUSINESS

451 words

STEVE PAINTER ARKANSAS DEMOCRAT-GAZETTE

Wal-Mart Stores Inc. said Wednesday that it will begin offering two low-price, prepaid cell-phone plans nationwide starting Sunday after successfully testing the plans in a dozen major U.S. markets beginning earlier this year.

Telecommunications industry analysts say the prepaid business is the fastgrowing segment of the market.

Under Wal-Mart's plan, customers can pay $30 in advance for 1,000 calling minutes, 1,000 text messages and 30 megabytes of mobile Web access. For $45, users get unlimited minutes, texting and Web access.

"In light of the savings customers continue to need, we have worked very quickly to extend this offering to all of our Wal-Mart customers nationwide, and just before the holidays," said Greg Hall, Wal-Mart vice president of media services, in a news release.

Customers already using the service prepay with cash, checks or credit cards, said Melissa O'Brien, a spokesman for the Bentonville-based company.

Ping Zhoa, a senior analyst with CreditSights Inc. in New York, said about 87 percent of the U.S. population already has cell-phone service, particularly those ages 15 to 65. Those without service are most receptive to prepaid because it does not involve a contract and can be started or stopped at will, she said.

Prepaid service has accelerated dramatically during the recession, Zhoa said.

Wal-Mart's prices, she said, are "clearly lower than what we're seeing in the marketplace for brand names." TracFone Wireless Inc. of Miami is handling the program for Wal-Mart. The company does not have its own wireless network. Rather, it buys coverage from major carriers such as Verizon Wireless, AT&T and T-Mobile, said Derek Hewitt, senior vice president of marketing for TracFone.

The price for the service - 3 cents a minute - is "a heck of a buy," said John Nugent, a business professor at Texas Woman's University in Denton and a former AT&T executive.

Customers are attracted to prepaid plans, he said, "because it's so convenient, you use it when you need it, and you get relatively cheap rates." Michael Nelson, analyst with Soleil Securities Group Inc. in New York, said the plan is likely to catch on with many customers.

"It's a low-priced alternative to traditional higher-priced contract plans offered by the national carriers," he said.

Nelson said he expects price competition in the wireless business to increase as incremental subscriber growth slows.

Wal-Mart's stock closed Wednesday at $50.19 a share, down 15 cents or 0.3 percent, as the market rallied, with the Dow Jones industrial average closing above 10,000 for the first time in more than a year. Wal-Mart's stock has traded between $46.25 and $59.23 in the past year.

This article was published 10/15/2009

October 15, 2009