Why T-Mobile is spending $4.4 bn to buy UScellular assets

In a $4.4 billion deal, T-Mobile is set to acquire UScellular’s wireless operations and a portion of its spectrum assets, marking a significant shift in the US telecom market, according to analyst firm GlobalData.
UScellular storeVerizon was in talks to buy telecom assets from UScellular. It is not clear why Verizon has pulled out of the race. UScellular is targeting annual revenue of $3.05 billion in 2024 with capital expenditure of $650 million.

The strategic review announced by UScellular in August 2023 hinted at a potential sale, putting the country’s largest regional mobile network operator’s assets on the market. This move sparked interest from national mobile network operators (MNOs), eager to acquire valuable spectrum assets, especially while the US Federal Communication Commission’s auction authority remains uncertain.

T-Mobile earlier said it expects to add 5.2 million to 5.6 million subscribers in 2024. T-Mobile’s cost-effective plans have helped it attract customers looking for flexible offerings. T-Mobile added 532,000 monthly bill-paying phone subscribers in the first quarter.

Pending regulatory approval, T-Mobile will gain over 4 million UScellular wireless subscribers and key spectrum assets. These assets include sub-6 GHz frequencies, enhancing coverage and capacity, particularly in rural areas covering 40 percent of UScellular’s footprint. Additionally, the 24 GHz mmWave spectrum will bolster T-Mobile’s capacity for high-speed home internet through 5G fixed wireless access (FWA).

The deal’s regulatory approval will likely depend on the administration in power by 2025, potentially affecting the timeline. United States will have a new president at the end of this year. The recent T-Mobile Mint acquisition, which concluded in May 2024, faced delays despite lacking the spectrum complexities of the UScellular transaction.

UScellular will retain 70 percent of its spectrum portfolio, including strategic mid-band frequencies and mmWave capacity. These retained assets are likely to be negotiated in the secondary spectrum market. UScellular’s strategic mid-band frequencies include licenses in the 3.45 GHz and C-Band, with potential interest from FWA operators — a market projected to surpass 20 million accesses by 2028, according to GlobalData.

Additionally, UScellular will keep its wireless towers, securing T-Mobile as the main tenant for 15 years across over 2,600 sites. This move positions UScellular as a key player in the US tower infrastructure sector, essential for supporting 5G network expansion and densification nationwide.

If the deal fails to go through, T-Mobile will pay U.S. Cellular a termination fee of $60 million, Telephone and Data Systems said in a filing.