With its purchase of 355 kiosks in Sam’s Club stores nationwide, MCI Communications Corp. has hands-on access to the consumer customer it seeks.
Before obtaining entrance into Sam’s, MCI’s retail presence as a wireless reseller consisted of 37 storefronts. The stores originally belonged to Nationwide Cellular Service Inc., which was acquired by MCI in September of 1995.
The stores will continue to operate as sites for MCI’s cellular and paging sales. There are 11 stores in the New York/New Jersey metropolitan area, 10 stores in Chicago, four in the Washington, D.C., area, six in Southern California, five in Boston and one in Philadelphia.
In addition to the storefronts, MCI also has been selling cellular and paging directly to customers who call for service. Sales have been prompted by either long-distance bill stuffers or national advertising of the MCI One package. MCI has offered wireless to business customers through its networkMCI campaign.
Now, MCI has purchased all the communications centers at Sam’s from CellStar Corp. of Dallas, a phone distributor. The sale price was not disclosed. The transaction is expected to close by the end of CellStar’s fourth quarter.
MCI said it will assume operation of the centers, employee contracts and certain activation contracts with cellular operators.
CellStar announced the pending purchase in June, as complicated details surrounding CellStar’s numerous activation contracts were being worked out.
MCI said it negotiates to buy cellular airtime from the A-side, B-side or both carriers in given markets. It resells paging service from Paging Network Inc. and SkyTel Corp.
Sam’s Club is a division of Wal-Mart Stores Inc. CellStar struggled with high operating expenses associated with Sam’s; the company said it knew profitability would be slow, but it was slower than expected. Also, CellStar said it hopes to focus more effort on its core business, wholesale distribution.
For MCI, the kiosks provide a direct sales route to the consumer. In most instances, MCI is selling co-branded phones, which contain the logo of both the manufacturer and MCI. It is reselling cellular and paging service, and is expected to resell personal communication services as well.
MCI isn’t the only telecommunications carrier to launch a specific retail plan. Sprint PCS announced last month it had acquired 15 percent of the floor space at RadioShack stores nationwide.
CellStar is expected to distribute phones to the Sam’s centers. Proceeds from the sale will be used to reduce bank debt and for general working capital purposes, CellStar said.
