In a $4.4 billion agreement, T-Mobile is acquiring the wireless operations and some spectrum holdings of U.S. Cellular, further dominating the market.
In addition to gaining ownership over U.S. Cellular’s wireless operations and around 30% of the spectrum assets across multiple frequency bands, T-Mobile would gain over 4 million new subscribers.
T-Mobile will also extend the lease period for the roughly 600 buildings where it already occupies a tenant ship and enter into a new master license agreement on more than 2,000 towers.
The acquisition would “create a better experience for all of our customers with more coverage and more capacity,” according to T-Mobile CEO Mike Sievert.
It can also mean that an industry with fewer participants than ever is about to see further consolidation.
Laptops 1000Analyst Dan Ives of Wedbush Securities stated, “The writing is on the wall for the carriers and consolidation is now on the horizon and could speed up into 2025.”
“We anticipate further deals over the course of the next year, but this is the first shot across the bow in the wireless realm.
T-Mobile is one of the telecom industry’s busier businesses when it comes to mergers and acquisitions.
2020 saw T-Mobile finalize its acquisition of Sprint, a smaller competitor. Additionally, its merger with MetroPCS Communications Inc. was approved by the Federal Communications Commission in 2013.
Customers of US Cellular will have access to T-Mobile’s 5G networks, which will improve their coverage and speed, the company announced on Tuesday.
According to the corporation, people who reside in underdeveloped rural areas of the nation will especially profit from the agreement.
LeRoy Carlson Jr., the chair of the U.S. Cellular Committee, said in a statement, “We are confident that continuing to deliver on our mission requires a level of scale and investment that is best achieved by integrating our wireless operations with those of T-Mobile.
Laptops 1000This is due to rising competition and the increasing capital intensity required keeping pace with the latest technologies.”
Customers of US Cellular can choose to convert to an unlimited T-Mobile plan of their choosing or stay on their existing plans, according to T-Mobile. If a plan change is made, they won’t have to pay any switching fees.
According to Ives at Wedbush, that is a mixed bag for customers.
“There is more competition and less options for American consumers, which could lead to lower prices,” Ives stated.
Cash and up to $2 billion in assumed debt are both included in the transaction. Amounts up to $100 million of the cash component are subject to reach specific operational and financial targets between the signing and conclusion of the contract.
About 70% of U.S. Cellular’s spectrum portfolio, which spans multiple spectrum bands, will remain in its possession.
The boards of Telephone and Data Systems Inc., a majority stakeholder of U.S. Cellular, and United States Cellular Corp. have unanimously approved the acquisition. The anticipated closure date is mid-2025.
Tuesday morning’s trading saw a more than 2% increase in the shares of U.S. Cellular.
