Mobile handshake, agreement

T-Mobile’s planned $4.4 billion purchase of UScellular’s wireless operations and a portion of its spectrum, announced today, is expected to boost T-Mobile rural wireless coverage and TDS fiber investment.

“There will be more investment in communities because of this deal,” said UScellular President and CEO Laurent Therivel, on a conference call with investors this morning.

Noting that investment in rural America is costly and challenging, he said, “You need scale in order to do that.”

T-Mobile will be able to bring that scale in a way that UScellular could not, Therivel said.

As UScellular majority owner, TDS will pick up cash from the purchase and, as TDS Executive Vice President and Chief Financial Officer Vicki Villacrez said on the call, TDS expects to use proceeds from the transaction and from the sale of UScellular’s remaining spectrum portfolio to “strengthen its balance sheet and continue the advancement of TDS’s fiber buildout program.”

She also noted that the company might return some of the proceeds to shareholders and use proceeds to pursue other opportunities to “grow the business.”

The $4.4 billion value assigned to the deal includes T-Mobile’s assumption of up to $2.2 billion in UScellular debt.

The T-Mobile UScellular Deal

The deal, expected to close in 2025, calls for UScellular to retain its wireless towers and to lease them to T-Mobile for at least 15 years. The decision to focus on that portion of the business would appear to be a smart one because, unlike the wireless service business, it doesn’t require a nationwide footprint for scale or success and it brings a guaranteed revenue stream.

UScellular expects to generate strong revenues from the sale of the 70% of its spectrum holdings that it will retain. Those holdings include valuable bands, such as the C-band and the 700 MHz band.

Uscellular Chart
Source: UScellular Sale of Wireless Operations and
Select Spectrum Assets

Additional information about the transaction can be found in this T-Mobile press release and in this UScellular press release.

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