Published on 29 May 2024 on Zacks via Yahoo Finance
T-Mobile (TMUS) Boosts Network With US Cellular Asset Buyout
In a concerted effort to bridge the digital divide and strengthen its leading market position, T-Mobile US Inc. TMUS has inked a definitive agreement with United States Cellular Corporation USM to acquire substantially all of the latter’s wireless operations along with 30% of its spectrum assets across several spectrum bands.T-Mobile will pay an aggregate of $4.4 billion, including a combination of cash and up to approximately $2 billion of assumed debt. The transaction is likely to close midway next year, subject to the fulfillment of mandatory closing conditions and other regulatory approvals. Telephone and Data Systems, Inc., which boasts about 83% ownership stake in US Cellular, has unanimously agreed to the deal to help unlock significant value for its wireless customers and shareholders.Post the deal closure and successful integration, millions of US Cellular customers, particularly in the underserved rural areas, are likely to get seamless access to superior connectivity and nationwide coverage of one the largest and fastest 5G networks of T-Mobile. In addition, US Cellular customers will have the opportunity to enjoy the Un-carrier’s industry-leading value-packed plans filled with benefits and perks such as streaming and free international data roaming along with best-in-class customer support without any switching costs.The transaction is likely to facilitate a competitive market with increased options and enable T-Mobile to expand its fast-growing home broadband offerings and fixed wireless products by tapping into the additional capacity and coverage created through the combined spectrum and wireless assets. The Un-carrier will also lease space on various US Cellular towers to ensure continued, uninterrupted service for its customers.On the other hand, the deal will enable US Cellular to improve its liquidity and reduce its debt burden, with an option to opportunistically monetize the retained 70% of total spectrum assets. Moreover, the company will enjoy a steady revenue stream with T-Mobile as its anchor tenant on a minimum of 2,015 incremental towers for 15 years in addition to approximately 600 towers where it already serves as a tenant. The transaction is, therefore, a win-win deal for both companies.Moving forward, T-Mobile is likely to gain significant market share by tapping into US Cellular's network assets. By offering competitive pricing and prioritizing customer satisfaction, T-Mobile is well-positioned to solidify its presence in the broadband market while driving growth and profitability in the long term.Shares of the company have gained 23.8% in the past year compared with the industry’s rise of 15.8%.
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