UScellular
U.S. Cellular to Sell Spectrum Licenses to Verizon in $1 Billion Deal
The WSJ reports that U.S. Cellular is selling a portion of its retained spectrum licenses to Verizon for $1 billion in cash as it looks to monetize the spectrum that wasn’t included in the proposed sale to T-Mobile. The Chicago-based telco, which caters to a base of mostly rural customers (approximately 4.5 million) across several states, on Friday said the deal includes the sale of 663 million megahertz point-of-presences of its cellular spectrum licenses. The deal is expected to close in mid-2025.
Under the terms of the agreement, U.S. Cellular will also sell 11 million megahertz point-of-presences of its advanced wireless services, and 19 million megahertz point-of-presences of its personal communications services licenses. The company said it has entered into additional agreements with two other mobile operators for the sale of other selected spectrum licenses.
TDS, the majority shareholder of U.S. Cellular, has delivered its written consent to approve the Verizon transaction.
Each transaction is dependent upon the closing of the proposed sale of the company’s cellular wireless operations and select spectrum assets to T-Mobile.
In May, T-Mobile agreed to buy much of U.S. Cellular’s operations which included about 30% of UScellular spectrum holdings, all of its customers and its retail stores in a deal worth $4.4 billion. That deal still requires regulatory approvals. It would give T-Mobile more than four million new customers and a trove of valuable spectrum rights to carry more of their data over the air.
According to the financial analysts at New Street Research, UScellular managed to score a higher-than-expected sale price to Verizon. “We valued these licenses at $812 million, and so this transaction is a 23% premium,” they wrote in a note to investors Friday morning.
Importantly, they argued that, as a result, the low band spectrum owned by EchoStar’s Dish Network might be worth more than they had previously calculated. “If we apply the premium to lowband licenses, based on this new mark, Dish’s 600 MHz portfolio would be worth $16 billion, up from $12 billion currently,” they wrote.
The New Street analysts speculated that UScellular’s remaining spectrum holdings will eventually be sold.
“This spectrum transaction took longer than we expected, and it is for fewer of the licenses than we expected,” they wrote of UScellular’s new deal with Verizon. “The monetization of the remaining [UScellular] spectrum could take time, but it will all be sold eventually.”
They argued that UScellular’s remaining, unsold spectrum holdings – which stretch across lowband holdings like 700MHz as well as mid band spectrum like C-band – could be worth as much as $3.2 billion.
But the analysts cautioned that it can be difficult to extrapolate spectrum values from just one transaction alone. For example, the licenses involved in the transaction between Verizon and UScellular are mostly located in smaller markets and therefore may not be directly comparable to spectrum licenses located in bigger cities. Further, most of the spectrum involved in the deal is low band, and so values might be different for large chunks of mid band spectrum.
References:
https://www.lightreading.com/5g/how-verizon-s-1b-uscellular-spectrum-deal-affects-echostar-s-dish
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T-Mobile to acquire UScellular’s wireless operations in $4.4 billion deal
T-Mobile will buy almost all of regional carrier UScellular’s wireless operations including customers, stores and 30% of its spectrum assets [1.] in a deal valued at $4.4 billion, the company said on Tuesday. The announcement comes nearly ten months after UScellular and its parent company TDS disclosed that they were undertaking a strategic review of the mobile business, suggesting a possible sale.
Note 1. UScellular stated that it will retain around 70% of its spectrum assets following the T-Mobile deal “and will seek to opportunistically monetize these retained assets.”
The transaction, which is subject to the satisfaction of customary closing conditions and receipt of certain regulatory approvals, is expected to close in mid-2025.
T-Mobile’s 5G SA network will expand to provide millions of UScellular customers, particularly those in underserved rural areas, a superior connectivity experience, moving from a roaming experience outside of the UScellular coverage area to full nationwide access on the country’s largest and fastest 5G network. Additionally, UScellular customers will have the ability to fully participate in the T-Mobile’s industry-leading value-packed plans filled with benefits and perks, and best-in-class customer support with the opportunity to save UScellular customers hundreds of millions of dollars. T-Mobile customers will also get access to UScellular’s network in areas that previously had limited coverage and the benefit of enhanced performance throughout UScellular’s footprint from the addition of the acquired UScellular spectrum to T-Mobile’s network.
“With this deal T-Mobile can extend the superior Un-carrier value and experiences that we’re famous for to millions of UScellular customers and deliver them lower-priced, value-packed plans and better connectivity on our best-in-class nationwide 5G network,” said Mike Sievert, CEO of T-Mobile. “As customers from both companies will get more coverage and more capacity from our combined footprint, our competitors will be forced to keep up – and even more consumers will benefit. The Un-carrier is all about shaking up wireless for the good of consumers and this deal is another way for us to continue doing even more of that.”
“T-Mobile’s purchase and integration of UScellular’s wireless operations will provide best-in-class connectivity to rural Americans through enhanced nationwide coverage and service offerings at more compelling price points,” said Laurent Therivel, CEO of UScellular. “The transaction provides our customers access to better coverage and speeds, as well as unlimited texting in more than 215 countries, content offers, device upgrades and other T-Mobile benefits.”
Best-in-Class Network Experience
The combination of both companies’ spectrum and assets will provide UScellular customers a superior connected experience on T-Mobile’s industry-leading nationwide 5G network that offers best-in-class performance, coverage, and speed. Customers of both companies, particularly those in underserved rural areas, will receive access to faster and more reliable 5G service they would not otherwise have.
Value-Packed Plans
UScellular customers will have the option to stay on their current plans or move to an unlimited T-Mobile plan of their choosing with no switching costs, which include beloved Un-carrier benefits such as streaming and free international data roaming. If UScellular customers choose to switch to T-Mobile, they could save hundreds of millions of dollars combined annually. Some will also have access to plans with increased savings previously not available to them, including T-Mobile’s 5G Unlimited 55+ plans. All customers will be able to take advantage of T-Mobile’s award-winning customer service team, and have better, more accessible in-person and digital retail support.
More Choice and Increased Competition
This transaction will create a much-needed choice for wireless in areas with expensive and limited plans from AT&T and Verizon, and for those that have been limited to one or no options for home broadband connectivity. By tapping into the additional capacity and coverage created through the combined spectrum and wireless assets, T-Mobile will spur competition and expand its fast-growing home broadband offering and fixed wireless products to communities without competitive broadband options, further bridging the digital divide for hundreds of thousands of customers in UScellular’s footprint.
Proven Un-carrier Playbook
T-Mobile has a proven industry-leading track record of bringing companies together in the name of enhanced connectivity, choice, and value for consumers. The integrations of MetroPCS in 2013 and Sprint in 2020 have been noted as two of the most successful merger combinations in wireless history that resulted in competition-enhancing shifts benefiting millions of consumers. Leveraging its tried-and-true playbook for successful integrations, T-Mobile will continue to deliver exceptional value and experiences to more people across the country, while forcing others to follow suit, for the good of customers.
Transaction Details and Financial Profile
T-Mobile will pay approximately $4.4 billion for the assets being acquired from UScellular in the transaction in a combination of cash and up to $2.0 billion of debt to be assumed by T-Mobile through an exchange offer to be made to certain UScellular debtholders prior to closing. To the extent any debtholders do not participate in the exchange, their bonds will continue as obligations of UScellular and the cash portion of the purchase price will be correspondingly increased. Following the closing of the transaction, UScellular will retain ownership of its other spectrum as well as its towers, with T-Mobile entering into a long-term arrangement to lease space on at least 2,100 additional towers being retained.
T-Mobile does not expect the transaction to impact the company’s 2024 guidance or 2024 authorized shareholder return program. T-Mobile expects this transaction will yield approximately $1.0 billion in effective total opex and capex annual run rate cost synergies upon integration, with total cost to achieve the integration currently estimated at between $2.2 billion to $2.6 billion. The company plans to reinvest a portion of synergies toward enhancing consumer choice, quality and competition in the wireless industry.
References:
https://www.t-mobile.com/news/business/uscellular-acquisition-operations-assets
https://finance.yahoo.com/news/t-mobile-buy-uscellulars-wireless-114507766.html
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Betacom and UScellular Introduce 1st Private/Public Hybrid 5G Network
UScellular’s Home Internet/FWA now has >100K customers
UScellular Launches 5G Mid-Band Network in parts of 10 states