T-Mobile has agreed to buy most of United States Cellular's wireless operations, including customers, stores, and 30% of its spectrum assets, for $4.4 billion. This announcement comes almost ten months after US Cellular started looking into strategic options for its business.
U.S. Cellular will keep 70% of its spectrum and its stakes in other companies, along with 4,400 telecom towers. However, T-Mobile will rent space on at least 2,600 of these towers for the long term.
The deal, funded by T-Mobile through cash and potentially $2 billion in debt, aims to improve service coverage for T-Mobile’s customers. Despite this large investment, T-Mobile does not foresee any changes to its financial outlook or its plans for returning value to shareholders in 2024. They expect to save around $1 billion in operating and capital expenses from the deal.
U.S. Cellular's shares increased by over 10% before the market opened following the announcement.
The transaction is expected to be completed by mid-2025, pending regulatory approval. Shareholders of U.S. Cellular do not need to take any action regarding the deal. Additionally, Telephone and Data Systems, which owns 83% of U.S. Cellular, has already approved the transaction.
Earlier this month, it was reported that Verizon was also interested in acquiring parts of U.S. Cellular.
Key Points
Major Acquisition: T-Mobile is buying most of U.S. Cellular's operations for $4.4 billion, which includes their customers, stores, and some key wireless spectrum assets.
Financial Stability: T-Mobile plans to finance this deal through cash and possibly taking on $2 billion in debt, but they don't expect it to affect their financial plans or returns to shareholders in 2024.
Regulatory and Approval Process: The deal, set to be completed by mid-2025, has already received approval from the main shareholder and is now waiting for regulatory approval.
FAQs
Q1. What did T-Mobile buy from US Cellular?
T-Mobile has agreed to purchase most of U.S. Cellular’s wireless operations, including customers, retail stores, and 30% of its spectrum assets, for $4.4 billion.
Q2. Will U.S. Cellular continue to operate after the sale?
Yes, U.S. Cellular will still operate. They will retain 70% of their spectrum and their investments in other companies, along with 4,400 telecom towers. T-Mobile will rent space on at least 2,600 of these towers.
Q3. What needs to happen before the deal can be finalized?
The deal needs to get regulatory approvals and is expected to close by mid-2025. U.S. Cellular shareholders do not need to take any action regarding the deal.
Q4. Who originally owned T-Mobile?
T-Mobile US, Inc., the entity commonly known as T-Mobile in the United States, was originally established by Deutsche Telekom AG, a German telecommunications company. Deutsche Telekom launched T-Mobile as a subsidiary to enter the U.S. market. Over the years, Deutsche Telekom has retained a significant ownership stake in T-Mobile US, and it remains the majority shareholder following various mergers and market activities, including the significant merger with Sprint Corporation in 2020.
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