UScellular and TDS Announce Sale of Wireless Operations and Select Spectrum Assets to T-Mobile for Approximately $4.4 Billion in Cash and Assumed Debt
UScellular and TDS have agreed to sell UScellular's wireless operations and select spectrum assets to T-Mobile for $4.4 billion, consisting of cash and assumed debt. The transaction includes 30% of spectrum assets and a new Master License Agreement (MLA) for over 2,000 towers. UScellular retains its 4,400 towers and 70% of its spectrum assets. The deal aims to enhance service for UScellular customers with T-Mobile's resources, including better prices and network improvements. The transaction, approved by both companies' boards, is expected to close by mid-2025, pending regulatory approvals.
- Sale price of $4.4 billion provides significant capital.
- T-Mobile to become a long-term tenant on 2,600 UScellular towers, ensuring a steady revenue stream.
- UScellular retains 70% of its spectrum assets, allowing future monetization opportunities.
- Deal approved by boards and independent directors, showing strong internal support.
- Transaction expected to provide immediate value to UScellular customers with improved network performance.
- Transaction contingent on regulatory approvals, introducing potential delays and uncertainties.
- Up to $100 million of the purchase price is contingent on achieving specific financial and operational metrics.
- Debt exchange offer can potentially reduce the cash payment received by UScellular.
Insights
The decision by UScellular and T-Mobile to consolidate wireless operations for
On the other hand, assuming
This acquisition marks a significant shift in the competitive landscape of the telecommunications industry. T-Mobile’s broader reach and resource base will likely drive enhanced competition, especially in rural markets where UScellular had a strong presence. This could lead to a shake-up in market share distribution, pushing other carriers to improve their service offerings and reduce prices. Such competitive dynamics are beneficial for consumers but may put pressure on margins industry-wide.
Moreover, for UScellular customers, transitioning to T-Mobile's 5G network could mean improved service quality and access to a wider range of features and plans. However, integration challenges could temporarily disrupt service quality and customer satisfaction. Long-term, the strengthened network coverage and increased investments by T-Mobile are expected to enhance user experience and network reliability.
From a legal standpoint, this transaction is noteworthy due to the extensive regulatory scrutiny it will likely face. The telecommunications industry is heavily regulated and any merger or acquisition of this scale will need to pass thorough examinations from entities such as the Federal Communications Commission (FCC) and possibly the Department of Justice (DOJ). The approval process will consider market competition, spectrum allocation and consumer impact.
The inclusion of a master license agreement (MLA) for over 2,600 towers provides a legal assurance of service continuity and addresses potential antitrust concerns by avoiding monopolistic control over physical assets. Additionally, the assumption of debt and the stipulated financial and operational metrics set clear conditions that must be met for the transaction to proceed, ensuring accountability and transparency throughout the process.
T-Mobile, after acquiring UScellular's wireless operations and customers, will use its greater resources to deliver benefits to UScellular customers, including lower prices, more robust plans, superior network experiences, and more added benefits
T-Mobile to enter into new MLA and be a long-term tenant on at least 2,600 of UScellular's towers
UScellular retains its nearly 4,400 owned towers, its equity method investments, and approximately
UScellular and TDS to hold conference call at 8:30 a.m. Central Time
Lower Prices, Faster Speeds, and More Reliable Performance on T-Mobile's Nationwide 5G Network Committed to Serving Rural Americans
T-Mobile's purchase and integration of UScellular's wireless operations will provide more competitive choices for UScellular customers, as they will benefit from T-Mobile's greater resources and ability to provide lower prices, more robust plans, and a better network experience. Access to T-Mobile's 5G network, enhanced by UScellular's spectrum and tower assets, will provide immediate value to UScellular customers through better coverage, speed and access to T-Mobile's "Un-carrier" benefits including content offers, additional savings for seniors and robust customer service options.
"For over 40 years, UScellular has delivered on its mission of connecting people to what matters most, and this transaction will ensure customers have access to the level of service they deserve," said LeRoy T. Carlson, Jr., Chair of the Board of Directors of UScellular. "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. T-Mobile has the resources to provide UScellular's customers with an unparalleled network experience, lower prices and higher-quality services. We are pleased that T-Mobile also shares our commitment to bringing best-in-class connectivity to rural Americans, who today comprise nearly
"The decisions we announced today are in the best interests of our customers and our shareholders. T-Mobile is the right partner for our wireless operations and will ensure that customers have access to best-in-class wireless speeds and performance, including 5G and a nationwide network, at compelling prices," said Laurent Therivel, Chief Executive Officer of UScellular. "We are committed to serving the needs of our customers and supporting our associates as we work to complete the transaction."
"This deal will create opportunity for T-Mobile to bring millions of UScellular customers lower prices and the Un-carrier's superior value on our best-in-class nationwide 5G network, offering much needed choice and more real competition across the wireless industry," said Mike Sievert, CEO of T-Mobile. "Bringing together UScellular's network resources with ours will enable us to fill gaps in connectivity that will create a better experience for all of our customers with more coverage and more capacity. And this is just some of the goodness this deal will bring. This will be a real win for consumers across the
Service Continuity and a Transformed UScellular Tower Business
In connection with the agreement, T-Mobile will enter into a new long-term MLA on a minimum of 2,015 incremental towers owned by UScellular and extend the lease term for the approximately 600 towers where T-Mobile is already a tenant. This will ensure continued, uninterrupted service for UScellular customers following the transaction and create a long-term contracted revenue stream from a strong anchor tenant for at least 15 years after the close of the transaction. With the inclusion of the towers occupied by other existing third-party tenants, UScellular's tower assets will represent one of the largest and most attractive tower businesses in
Retained Spectrum and Equity-Method Investments
UScellular retains approximately
UScellular also retains significant equity method investment interests, primarily from its wireless partnerships, that generated
Other Transaction Details
T-Mobile expects to finance the transaction with existing cash on hand, and the consummation of the transaction is not subject to any financing contingencies. In connection with the transaction, T-Mobile expects to conduct an exchange offer under which holders of certain UScellular debt with a face value of approximately
UScellular anticipates being in a position to return capital to shareholders after the close of the transaction, but any decisions regarding capital allocation or use of proceeds will be made by the UScellular Board of Directors in due course.
In order to provide financial perspective on the impact of this transaction, in the next few months, UScellular expects to provide both pro forma financial statements regarding this transaction, and segment financial statements which show the results of UScellular's wireless operations and tower business separately.
The transaction has been unanimously recommended by the independent directors of UScellular and unanimously approved by the boards of directors of both UScellular and TDS. In addition, TDS, in its role as the 83 percent shareholder of UScellular, has delivered its written consent approving the transaction. No further action by UScellular's shareholders will be needed or solicited in connection with the transaction.
The transaction is expected to close in mid-2025, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions.
Advisors
Citigroup Global Markets Inc. is serving as lead financial advisor, Centerview Partners LLC is serving as financial advisor and Sidley Austin LLP is serving as lead legal advisor to TDS. TD Securities (
Conference Call Information
UScellular and TDS will hold a joint conference call on May 28, 2024, at 8:30 a.m. Central Time.
- Access the live call on UScellular Events & Presentations or TDS Events & Presentations or at https://events.q4inc.com/attendee/598119900
- Access the call by phone at (800) 715-9871 (
U.S. /Canada ), conference ID: 2264212
Before the call, information to be discussed during the call will be posted to UScellular Events & Presentations. The call will be archived on UScellular Events & Presentations and TDS Events & Presentations.
About UScellular
United States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to customers with 4.5 million retail connections in 21 states. The
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates, and expectations about the consummation and benefits of the proposed transactions, including anticipated synergies, and T-Mobile's and UScellular's plans, objectives, expectations and intentions, and the expected timing of completion of the proposed transaction. These statements are based on current plans, estimates, projections, and assumptions, and the anticipated timing of completion of the proposed transactions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: the failure to obtain, or delays in obtaining, required regulatory approvals and the risk that such approvals may be conditioned upon or result in the imposition of terms or conditions that could adversely affect the expected benefits of the proposed transaction; the failure to satisfy any of the other conditions to the proposed transaction on a timely basis, or at all; the occurrence of events that may allow one or more parties to terminate the definitive agreement; the adverse effects on UScellular's or T-Mobile's common stock and on UScellular's or T-Mobile's operating results because of a failure to complete the proposed transactions in the anticipated timeframe or at all; adverse changes in the ratings of UScellular's or T-Mobile's debt securities or adverse conditions or disruptions in the financial or credit markets; negative effects of the announcement, pendency or consummation of the transaction on UScellular's operating results, including as a result of changes in key customer, supplier, employee or other business relationships; significant transaction costs and unknown liabilities; failure to realize the expected benefits and synergies of the proposed transaction in the expected timeframes or at all; costs or difficulties related to the integration of UScellular's network and operations into T-Mobile; the risk of litigation or regulatory actions, including antitrust litigation; the risk that certain contractual restrictions contained in the definitive agreement during the pendency of the proposed transaction could adversely affect UScellular's ability to pursue business opportunities or strategic transactions; effects of changes in the state or federal regulatory environment in which UScellular and T-Mobile operate; intense competition; the ability of UScellular and T-Mobile to retain and attract people of outstanding talent throughout all levels of the organization; the ability of UScellular to obtain or maintain leases for its towers; advances in technology; the ability of the company to successfully construct and manage its towers; difficulties involving third parties with which UScellular does business; uncertainties in UScellular's future cash flows and liquidity and access to the capital markets; the ability to make payments on UScellular indebtedness or comply with the terms of debt covenants; changes in tax rules or pronouncements; the possibility that the Board of Directors of UScellular will not declare dividends; conditions in the
Additional Information and Where to Find It
UScellular will prepare an information statement on Schedule 14C for its shareholders with respect to the approval of the transaction described herein. When completed, the information statement will be mailed to UScellular's shareholders. You may obtain copies of all documents filed by UScellular with the SEC regarding this transaction, free of charge, at the SEC's website, www.sec.gov or from UScellular's website at https://investors.uscellular.com.
View original content:SOURCE United States Cellular Corporation
FAQ
What did UScellular sell to T-Mobile?
What is the value of the deal between UScellular and T-Mobile?
How will UScellular customers benefit from the T-Mobile transaction?
What assets did UScellular retain after the sale to T-Mobile?
When is the UScellular and T-Mobile transaction expected to close?
