Quiver Quantitative - T-Mobile (TMUS) has announced a $4.4 billion deal to acquire nearly all of United States Cellular's (USM) wireless operations, including customers, stores, and 30% of its spectrum assets. This move marks a significant expansion for T-Mobile, enhancing its coverage and competitive position in the U.S. market. The acquisition will be funded through a combination of cash and up to $2 billion in debt, which T-Mobile will assume through an exchange offer to some of U.S. Cellular's debtholders.
U.S. Cellular's shares surged over 10% in pre-market trading following the announcement. The regional carrier, which had been exploring strategic options for nearly ten months, will retain ownership of about 70% of its spectrum, its equity-method investments, and 4,400 telecom towers. T-Mobile will become a long-term tenant on at least 2,600 of these towers, ensuring continued operational synergy between the two companies.
Market Overview:
- Acquisition bolsters T-Mobile's network coverage and customer base.
- Deal includes US Cellular's customers, stores, and 30% of its spectrum assets.
- US Cellular retains ownership of remaining spectrum, towers, and certain investments.
- T-Mobile to fund deal with cash and assumed debt, anticipating cost synergies.
- Deal strengthens T-Mobile's competitive position in the US wireless market.
- Market will monitor regulatory approval process and integration progress.
- Potential impact on pricing and service offerings for customers of both companies.
T-Mobile does not anticipate any impact on its financial forecast or shareholder return program for 2024 as a result of the acquisition. The company expects to yield approximately $1 billion in operating expense and capital spending cost synergies from the deal. The transaction, which is subject to regulatory approvals, is expected to close by mid-2025. U.S. Cellular has stated that its shareholders are not required to act on the deal, as Telephone and Data Systems (TDS), the 83% shareholder of U.S. Cellular, has already provided written consent approving the transaction.
In related news, Verizon (NYSE:VZ) was reportedly in talks to acquire parts of U.S. Cellular, according to a recent Wall Street Journal report. This highlights the ongoing consolidation and competitive dynamics within the U.S. telecom sector as major players seek to enhance their market positions through strategic acquisitions and partnerships.
This article was originally published on Quiver Quantitative