US Markets
Tuesday, May 28th, 2024 3:23 pm EDT
Key Points
- T-Mobile’s Acquisition of U.S. Cellular Assets: T-Mobile announced a $4.4 billion deal to acquire most of U.S. Cellular, including its stores, some spectrum assets, and its customers. The acquisition includes cash and up to $2 billion of debt, with part of the cash contingent on meeting certain financial and operational metrics.
- Spectrum and Infrastructure Arrangements: T-Mobile will acquire about 30% of U.S. Cellular’s wireless spectrum to improve rural coverage and connectivity for U.S. Cellular customers, who can keep their current plans or switch to T-Mobile. U.S. Cellular will retain 70% of its spectrum and towers, leasing space on at least 2,100 towers to T-Mobile and allowing T-Mobile to sign new long-term leases on at least 2,015 towers and extend leases on about 600 others.
- Strategic Context and Timeline: The acquisition follows T-Mobile’s recent $1.35 billion purchase of Mint Mobile’s parent company and the 2020 merger with Sprint. The companies expect the deal to close in mid-2025. Earlier discussions involving T-Mobile and Verizon to divide U.S. Cellular’s spectrum were reported, but a separate deal with Verizon could take longer or fall through.
Shares of U.S. Cellular surged nearly 6% on Tuesday following T-Mobile’s announcement of a $4.4 billion acquisition plan. T-Mobile intends to acquire a substantial portion of U.S. Cellular, including its retail stores, some spectrum assets, and its customer base. The deal comprises cash and up to $2 billion in debt, with up to $100 million of the cash portion contingent on specific financial and operational metrics being met between the deal’s signing and closing.
In response to the news, T-Mobile shares rose by more than 1%. The acquisition includes approximately 30% of U.S. Cellular’s wireless spectrum, which T-Mobile plans to utilize to enhance coverage in rural areas and improve connectivity for U.S. Cellular customers across the United States. U.S. Cellular customers will have the option to retain their current plans or switch to T-Mobile plans.
Despite the acquisition, U.S. Cellular will retain 70% of its wireless spectrum and towers, and will lease space on at least 2,100 additional towers to T-Mobile. Furthermore, the deal will enable T-Mobile to sign new long-term leases on at least 2,015 towers owned by U.S. Cellular and extend existing leases on around 600 others. This arrangement will provide U.S. Cellular with a “strong anchor tenant” for at least 15 years post-closure.
This announcement follows T-Mobile’s recent $1.35 billion acquisition of Ka’ena, the parent company of Mint Mobile, which received approval from the U.S. Federal Communications Commission in April. Additionally, T-Mobile’s notable $26 billion merger with Sprint was completed in 2020. Earlier reports from The Wall Street Journal indicated that T-Mobile and Verizon were in discussions to divide U.S. Cellular’s wireless spectrum, though a separate transaction with Verizon might take longer or could potentially fall through.
The companies anticipate that the deal will be finalized by mid-2025. This summary encapsulates the recent developments and strategic moves involving T-Mobile and U.S. Cellular, highlighting their implications for market dynamics and customer options.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/28/t-mobile-to-acquire-most-of-us-cellular-in-4point4-billion-deal.html
