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T-Mobile to sell service at Family Dollar stores

Carrier taps Family Dollar stores, along with 7-Eleven, to replace the loss of RadioShack as a retail partner.

T-Mobile USA said today that it will begin selling its a prepaid phone and service through discount retailer Family Dollar as the carrier continues to move deeper into the prepaid business.

A Family Dollar store in South Carolina. Family Dollar

Family Dollar, which has 6,000 locations, is the next retail chain to announce a partnership with T-Mobile following 7-Eleven. Both are meant to serve as a replacement for RadioShack, which plans to stop selling T-Mobile service and switch to Verizon Wireless next month.

The demographics of the typical 7-Eleven and Family Dollar customer suggest the company is going after the low-end prepaid market, competing against the likes of Tracfone. It's a big change from T-Mobile's presence at RadioShack, where the electronics retailers sold higher end contract services.

"T-Mobile is excited to work with Family Dollar to offer an affordable prepaid device to its customers who seek value and convenience when shopping," Amy McCune, vice president of national retail for T-Mobile USA, said in a statement.

As with the 7-Eleven partnership, T-Mobile will sell its prepaid handset, the GS170 from LG Electronics, which is a basic flip cell phone that costs $30.

T-Mobile said customers can sign up for its no-contract service plan, including a $50-per-month plan with unlimited phone calls, text messages, and Internet access with 100MB of data.

Family Dollar, meanwhile, will push T-Mobile's products and other wireless offerings with displays placed at the front of stores. The retail chain will offer in-store promotions and marketing as well.

T-Mobile's recent strategy suggests the carrier has all but given up on the contract customer segment. All of its phones and plans have a no-contract option, and its recent financial results indicate that its competitive position among contract customers has weakened. In the second quarter, it lost 281,000 net contract customers but gained 231,000 net prepaid customers.

Analysts saw the loss of the RadioShack partnership as a blow to T-Mobile, but the carrier insists that it chose to end the relationship.