T-Mobile Buys Most of US Cellular for $4.4 billion

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Key Takeaways

  • T-Mobile agreed to buy out most of US Cellular’s wireless interests.
  • The deal will bring more 5G coverage to underserved areas, but possibly less competition.
  • The companies expect regulator approval for the purchase by mid-2025.

T-Mobile has struck a deal to buy most of US Cellular’s wireless operations in a move that will strengthen its position in the market. 

The purchase will include wireless customers, stores, and around 30% of spectrum assets, while the seller will retain 70% of the spectrum portfolio as well as ownership of its towers. 

In addition, T-Mobile will enter into a long-term agreement to lease space on at least 2,600 towers. 

The Bellevue, Washington-based network operator claimed the deal will bring better nationwide and 5G coverage for US Cellular customers, especially those in “underserved rural areas.”

This appears to be a long-term strategic move from T-Mobile as it has previously struggled to compete with AT&T and Verizon in rural locations. However, acquiring the assets will reduce the competition in certain areas with fewer carriers in the market. This aspect is likely to be an obstacle as the companies aim for regulatory approval by mid-2025. 

The telecom has been expanding relatively quickly in recent weeks, having completed its buyout of Mint Mobile at the start of May.

On the back of this news on Tuesday, US Cellular’s share price spiked by more than 10% in trading before the bell, almost 10 months after company chiefs announced they were exploring options on its future direction.

T-Mobile CEO Mike Sievert maintained that customers from both companies would get “more coverage and more capacity” from the acquisition, while the competition would be “forced to keep up.”

T-Mobile is set to fund the deal via a combination of cash and a debt purchase of up to $2 billion to consist of an exchange offer to some US Cellular debtholders. Despite the significant acquisition, T-Mobile doesn’t anticipate any meaningful impact on its balance sheet for the current year.