T-Mobile announced plans to acquire a significant chunk of U.S. Cellular, including its stores, spectrum assets, and customer base, for a hefty $4.4 billion. This news sent U.S. Cellular’s shares soaring nearly 6% on Tuesday, while T-Mobile’s shares enjoyed a modest bump of over 1%.
T-Mobile’s press release detailed that the deal would be financed with cash and up to $2 billion in debt. Interestingly, $100 million of the cash component is contingent on U.S. Cellular meeting specific financial and operational milestones between the signing and the deal’s closure.
A key element of this acquisition is T-Mobile’s gain of around 30% of U.S. Cellular’s wireless spectrum. T-Mobile plans to leverage this to enhance its coverage in rural areas, offering improved connectivity to U.S. Cellular’s customer base across the country. Both companies assured that current U.S. Cellular customers could either retain their existing plans or switch to T-Mobile’s offerings.
U.S. Cellular isn’t letting go of all its assets, retaining 70% of its wireless spectrum and towers. However, it will lease space on at least 2,100 additional towers to T-Mobile. This deal also allows T-Mobile to sign new long-term leases on at least 2,015 U.S. Cellular-owned towers and extend existing leases on about 600 others, securing U.S. Cellular customers a “strong anchor tenant” for at least the next 15 years.
This isn’t T-Mobile’s first major acquisition. Earlier this year, it closed a $1.35 billion deal to buy Ka’ena, the parent company of Mint Mobile, with the U.S. Federal Communications Commission giving the green light in April. And who can forget the $26 billion merger with Sprint in 2020?
While this deal with U.S. Cellular is poised to shake up the wireless industry, it’s not a done deal yet. The companies anticipate finalizing the acquisition by mid-2025. Meanwhile, there were whispers about T-Mobile and Verizon possibly dividing U.S. Cellular’s spectrum, though a deal with Verizon remains uncertain.
(Source: Forbes | WSJ)
