AT&T Launching A Groupon Clone -- Why It Actually Makes Sense

AT&T Inc. (T), aiming to tap the billion- dollar market for online coupons dominated by Groupon Inc., will introduce its own discount site in about a month in Los Angeles, Atlanta and Dallas-Fort Worth.

The site, on its yellowpages.com subsidiary, is sweetening the deal for consumers who register with a $10 credit beginning today, said Dawn Benton, an AT&T spokeswoman.

AT&T, the second-largest U.S. wireless carrier, will have to compete in the market against Groupon and a growing number of new entrants, including Facebook Inc. and New York Times Co. (NYT) Facebook, the social networking site with more than 500 million users, last month said it is trialing a daily coupon site in five U.S. cities.

The U.S. daily deals market, with discounts of as much as 90 percent at restaurants, clothing stores and nail salons, will grow to $3.93 billion in 2015, from $1.25 billion this year, according to a projection from BIA/Kelsey in March. Under the most favorable conditions, sales could reach as much as $6.1 billion, the Chantilly, Virginia-based consulting firm said.

AT&T plans to roll out the daily deal site to other cities and offer it on mobile devices, said Benton. She declined to say which businesses may be part of the initial trial.

Market leader Groupon, based in Chicago, is planning an initial public offering later this year that would value the company at between $15 billion and $25 billion, two people familiar with the plans said last month.

In a bid to stand out from the growing crowd of daily deal competitors, which include LivingSocial.com, the website also recently introduced a new service called Groupon Now that presents users with bargains based on their location.

Dallas-based AT&T rose 9 cents to $31.21 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 6.2 percent this year.

To contact the reporter on this story: Greg Bensinger in New York at gbensinger1@bloomberg.net