T-Mobile is buying U.S. Cellular’s wireless operations and certain spectrum assets in a deal valued at $4.4 billion and further consolidating the industry.
T-Mobile would gain more than 4 million new customers, control U.S. Cellular’s wireless operations, and about 30% of spectrum assets across several spectrum bands. It will also enter into a new master license agreement on more than 2,000 towers and extend the lease term for the approximately 600 towers where it is already a tenant.
T-Mobile CEO Mike Sievert said the deal will “create a better experience for all our customers with more coverage and capacity.”
It may also signal the start of more consolidation in an industry with fewer players than ever.
“The writing is on the wall for the carriers, and consolidation is now on the horizon and could speed up into 2025,” said Wedbush Securities analyst Dan Ives. “This is the first shot across the bow in the wireless world, and we expect more deals in the next year.
T-Mobile is among the more active telecommunications companies in mergers and acquisitions. In 2020, T-Mobile completed the takeover of its smaller rival, Sprint. In 2013, the Federal Communications Commission approved its merger with MetroPCS Communications Inc.
T-Mobile said Tuesday that U.S. Cellular customers will gain access to its 5G network, which will give them better coverage and speed. The company said the deal will particularly benefit those who live in underserved rural areas of the country.
“In the face of rising competition and increasing capital intensity required to keep pace with the latest technologies, and following our careful and deliberate strategic review, we are confident that continuing to deliver on our mission requires a level of scale and investment that is best achieved by integrating our wireless operations with those of T-Mobile,” U.S. Cellular Chair LeRoy Carlson Jr. said in a statement.
T-Mobile said that U.S. Cellular customers can remain on their current plans or switch to an unlimited T-Mobile plan of their choice. They will not incur switching costs if a plan changes.
That is a mixed bag for consumers, said Ives at Wedbush.
“The U.S. consumer has fewer choices, but there is more competition, which could lower prices,” Ives said.
The transaction includes cash and about $2 billion of assumed debt. Up to $100 million of the cash component is contingent on hitting specific financial and operational metrics between the deal’s signing and closing.
U.S. Cellular will keep about 70% of its spectrum portfolio across several bands.
The deal has been unanimously approved by the United States Cellular Corp. and Telephone and Data Systems Inc. boards. Telephone and Data Systems Inc. is a majority shareholder of U.S. Cellular. It is expected to close in mid-2025.
U.S. Cellular’s stock jumped more than 2% in morning trading on Tuesday.
