T-Mobile will acquire U.S. Cellular’s wireless communications business and certain spectrum assets for $4.4 billion, further consolidating the industry.
T-Mobile will gain more than 4 million new customers and gain control of approximately 30 percent of U.S. Cellular’s wireless communications business and spectrum assets across multiple frequency bands.
T-Mobile also plans to enter into new master license agreements for more than 2,000 base stations and extend leases for approximately 600 base stations for which T-Mobile is already a tenant.
T-Mobile CEO Mike Seibert said the deal will “create greater coverage and greater capacity, creating a better experience for all our customers.”
This could signal the start of further consolidation in an industry with fewer players than ever before.
“Things are getting worse for carriers, with consolidation on the horizon and likely accelerating through 2025,” said Dan Ives, an analyst at Wedbush Securities. “This is the first warning sign for the wireless industry, and we expect to see many more deals happening over the next 12 months.”
T-Mobile has been one of the most active companies in the telecommunications industry when it comes to mergers and acquisitions.
In 2020, T-Mobile completed its acquisition of smaller rival Sprint.
Then in 2013, the Federal Communications Commission approved a merger with MetroPCS Communications.
T-Mobile announced Tuesday that U.S. Cellular customers will now have access to the company’s 5G network, which will bring better coverage and speeds.
The company said the deal would particularly benefit people living in underserved rural areas of the country.
“After a careful and planned strategic review as we face increasing competition and capital intensity to keep up with the latest technology, we believe that our continued mission requires the scale and investments that can be best achieved by combining our wireless communications business with that of T-Mobile,” U.S. Cellular Chairman LeRoy Carlson Jr. said in a statement.
T-Mobile said U.S. Cellular customers can continue with their current plans or switch to any unlimited T-Mobile plan they want.
There are no switching costs if you change plans.
Wedbush’s Ives said this is a mix of good and bad for consumers.
“American consumers will have less choice, but more competition and potentially lower prices,” Ives said.
The transaction includes cash and assumption of up to approximately $2 billion in debt.
Up to $100 million of the cash portion is contingent on achieving certain financial and operational milestones between signing of the agreement and closing.
U.S. Cellular plans to retain about 70% of its spectrum portfolio across multiple frequency bands.
The transaction was unanimously approved by the boards of directors of United States Cellular and Telephone and Data Systems, Inc., US Cellular’s largest shareholder.
It is scheduled to close in mid-2025.
U.S. Cellular shares rose more than 2% in morning trading Tuesday.
