T-Mobile buys struggling rival UScellular, looks to boost private 5G business – SDxCentral

3 minutes, 24 seconds Read

T-Mobile US announced plans to acquire the nation’s No. 5 facilities-based wireless operator UScellular in a deal valued at up to $4.4 billion. The move should boost the nationwide operator’s 5G footprint, capacity and potentially its still nascent private 5G business and comes just months after T-Mobile US executives hinted at acquiring its smaller rival.

The deal calls for T-Mobile US to purchase all of UScellular’s current customer base of approximately 4.5 million wireless connections, retail distribution channels and 30% of UScellular’s spectrum assets. That purchase price includes up to $2 billion in assumed debt, with the deal expected to close by the middle of 2025.

UScellular has been struggling to compete and add new connections in the face of increasing nationwide competition. The carrier’s approximately 4.5 million wireless connections at the end of the first quarter was nearly 4% less than what it had a year ago.

The carrier has attempted to stem that outflow of connections by increasing its focus in the more stable enterprise space, which it claimed its more localized focus would allow it to better battle those larger rivals. It has also increased its moves into the private 5G arena, including a recent deal to add gear from Ericsson subsidiary Cradlepoint.

Any private 5G success could be compelling for T-Mobile US, which has seen limited success in the space.

Callie Field, president of T-Mobile US’ Business Group, noted during the carrier’s most recent earnings call that it was working with the U.S. Coast Guard “to build out a private network to deliver seamless, secure connectivity from ship-to-shore.” Field also pointed to deals with Delta Airlines at its Atlanta headquarters and works with Ericsson on networking slicing use cases.

T-Mobile US also has a unique advantage in the U.S. market in being one of the few to have a fully commercialized 5G standalone (SA) network core that allow the operator to support more advanced 5G-based services.

UScellular’s journey into T-Mobile US’ arms

UScellular’s parent company Telephone and Data Systems (TDS) will maintain control over approximately 70% of the carrier’s spectrum assets, which it said it “will seek to opportunistically monetize.”

TDS will also maintain control over UScellular’s approximately 7,000 cell sites, with T-Mobile US signing a master lease agreement to continue leasing access to at least 2,000 of those sites, 1,400 of which T-Mobile US does not currently have access to. TDS noted in its release that those sites also represent a valuable asset, which hints it might be looking to unload those sites at some point.

TDS last year stated it was exploring “strategic alternatives” for its wireless operations.

Dish deal fell apart

Rumors had initially linked a possible deal with Dish Network, which is the nation’s No. 4 operator.

“They have towers, they have spectrum and they operate in geographies that we haven’t fully built out so it’d be something that we’d be interested in looking at,” Tom Cullen, EVP of corporate development of Dish Network, said during a Dish Network presentation late last year.

However, Dish Network shortly after fell into an ongoing financial battle for survival that it’s still fighting, which included a recent $100 million payment to T-Mobile US due to Dish not being able to fulfill a pending spectrum purchase.

T-Mobile US filled that vacuum earlier this year when its CFO brought up UScellular’s name during the carrier’s fourth quarter of 2023 earnings call. That comment was in reference to T-Mobile US’ view on its “capital allocation methodology,” which he said tries to identify “the highest value-creating opportunities” around investing in its network, growth of its core business and “adjacent businesses.”

“Then, of course, we’ll look at all other things beyond that, whether that’s in the fiber space, whether that’s the UScellular’s, we’d look at that process and see are there value-creating opportunities,” Peter Osvaldik said.

T-Mobile US recently moved on the first part of that notion by striking a partnership with investment firm EQT to purchase U.S.-based fiber Lumos. It has now moved on the second with the UScellular deal.

This post was originally published on the 3rd party mentioned in the title ofthis site

Similar Posts