T-Mobile inks $4.4 bn deal to acquire UScellular business

T-Mobile US has signed a deal worth approximately $4.4 billion to acquire regional telecom operator UScellular. T-Mobile’s deal will include wireless operations — wireless customers and stores, as well as certain spectrum assets from UScellular.
T-Mobile retail network
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.

UScellular will retain ownership of 70 percent its spectrum as well as 4,400 of its own telecom towers. UScellular will retain a majority of existing wireless spectrum portfolio
– including Cellular, C-Band, and 3.45 GHz.

T-Mobile earlier acquired MetroPCS in 2013 and Sprint in 2020.

“As customers from both companies will get more coverage and more capacity from our combined footprint, our competitors will be forced to keep up – and even more consumers will benefit. The Un-carrier is all about shaking up wireless for the good of consumers and this deal is another way for us to continue doing even more of that,” said Mike Sievert, CEO of T-Mobile.

The transaction solidifies position of UScellular as the 5th largest tower company in the
U.S. UScellular aims at monetizing its remaining spectrum and telecom towers in the future.

“T-Mobile’s purchase and integration of UScellular’s wireless operations will provide best-in-class connectivity to rural Americans through enhanced nationwide coverage and service offerings at more compelling price points,” said Laurent Therivel, CEO of UScellular.

USCellular is targeting annual revenue of $2.95 billion – $3.05 billion in 2024. USCellular reported operating revenues of $950 million for the first quarter of 2024, versus $986 million for the same period one year ago. Service revenues totaled $754 million, versus $767 million for the same period one year ago. ARPU of USCellular was $51.92.

USCellular has 4.5 million retail connections in 21 states. The Chicago-based company had 4,300 full- and part-time associates as of March 31, 2024. T-Mobile did not indicate any job reduction following the acquisition of USCellular.

If UScellular customers choose to switch to T-Mobile, they could save hundreds of millions of dollars combined annually. Some will also have access to plans with increased savings previously not available to them, including T-Mobile’s 5G Unlimited 55+ plans.

T-Mobile will pay approximately $4.4 billion — a combination of cash and up to $2 billion of debt to be assumed by T-Mobile.

T-Mobile will be entering into a long-term arrangement to lease space on at least 2,100 additional towers being retained. T-Mobile does not expect the transaction to impact the company’s 2024 guidance.

T-Mobile expects this transaction will yield approximately $1.0 billion in effective total Opex and Capex annual run rate cost synergies, with total cost to achieve the integration currently estimated at between $2.2 billion to $2.6 billion. The company plans to reinvest a portion of synergies toward enhancing consumer choice, quality and competition in the wireless industry.

The transaction, which is subject to the satisfaction of customary closing conditions and receipt of certain regulatory approvals, is expected to close in mid-2025.

Cleary Gottlieb Steen & Hamilton and DLA Piper are acting as legal counsel to T-Mobile.

Citigroup Global Markets is serving as lead financial advisor, Centerview Partners is serving as financial advisor and Sidley Austin is serving as lead legal advisor to TDS. TD Securities and Wells Fargo are also serving as financial advisors to TDS for the transaction. PJT Partners is serving as financial advisor and Cravath, Swaine & Moore is serving as legal advisor to the independent directors of UScellular. Clifford Chance and Wilkinson Barker Knauer are also serving as legal regulatory advisors to UScellular and TDS for the transaction.

Baburajan Kizhakedath