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T-Mobile Snags Majority of U.S. Cellular

U.S. Cellular stocks surged by 6% on Tuesday in response to T-Mobile's announcement of a major acquisition
May 29, 2024

Shares of U.S. Cellular surged by 6% on Tuesday following T-Mobile's announcement of a significant acquisition. T-Mobile plans to buy most of U.S. Cellular, including its stores, certain spectrum assets, and customer base, in a deal valued at $4.4 billion.

The transaction includes cash and up to $2 billion in debt, as per T-Mobile’s press release. An additional $100 million of the cash portion is contingent on specific financial and operational targets being met between the signing and closing of the deal, according to U.S. Cellular.

T-Mobile's stock also saw a positive reaction, climbing more than 1% during Tuesday’s trading session.

As part of the agreement, T-Mobile will acquire approximately 30% of U.S. Cellular’s wireless spectrum. This move aims to enhance coverage in rural areas and improve connectivity for U.S. Cellular customers nationwide. U.S. Cellular customers will have the option to keep their current plans or switch to T-Mobile plans.

U.S. Cellular will retain 70% of its wireless spectrum and towers while leasing space on at least 2,100 additional towers to T-Mobile. Furthermore, T-Mobile will secure new long-term leases on at least 2,015 U.S. Cellular-owned towers and extend existing leases on about 600 others. This agreement ensures a "strong anchor tenant" for U.S. Cellular customers for at least 15 years post-deal.

This acquisition follows T-Mobile’s recent $1.35 billion purchase of Ka’ena, the parent company of Mint Mobile, which received approval from the U.S. Federal Communications Commission in April. T-Mobile also merged with Sprint in 2020 in a landmark $26 billion deal.

Earlier reports from The Wall Street Journal indicated that T-Mobile and Verizon were in discussions to divide U.S. Cellular’s wireless spectrum, but a separate deal with Verizon might face delays or fall through.

The companies anticipate finalizing the acquisition by mid-2025. This strategic move is expected to strengthen T-Mobile's position in the market and significantly expand its rural coverage, benefiting both companies and their customers.

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