US Cellular Sells Spectrum to Verizon for $1 Billion, Fueling T-Mobile Acquisition
Shares of US Cellular Corporation (USM) surged on Friday after the company announced it had agreed to sell a significant chunk of its spectrum licenses to Verizon Communications (VZ) for a cool $1 billion. This strategic move underscores US Cellular’s commitment to monetizing its assets ahead of its pending acquisition by T-Mobile US.
Specifically, US Cellular will part ways with 663 million MHz POPs of its Cellular (850 MHz) spectrum, alongside 11 million MHz POPs of AWS and 19 million MHz POPs of PCS licenses. The transaction, which is expected to be finalized in cash, includes potential adjustments as outlined in the agreement.
The sale has received the green light from Telephone and Data Systems, Inc. (TDS), US Cellular’s majority shareholder, holding an 82% stake. This agreement follows previous deals where US Cellular inked agreements with two other mobile network operators to sell selected spectrum licenses. These transactions involve 12 million MHz POPs in the CBRS, C-Band, and 700 MHz B/C Block bands, but the buyers and specific terms remain under wraps.
These deals are subject to regulatory approval and customary closing conditions. Following these transactions, US Cellular will retain a substantial portfolio of spectrum, holding onto 3.4 billion MHz POPs of low and mid-band spectrum (700 MHz, 3.45GHz, CBRS, and C-Band), along with 17.2 billion MHz POPs of mmWave spectrum.
These moves are aligned with US Cellular’s strategy to maximize value from its spectrum assets. This strategy is particularly relevant given the company’s proposed sale to T-Mobile US (TMUS), which was announced in May 2024. T-Mobile agreed to acquire substantially all of US Cellular and TDS wireless operations, including customers, stores, and specific spectrum assets, for a total of $4.4 billion. This deal involves a combination of cash and up to $2.0 billion of debt.
Interestingly, Verizon, the buyer of this spectrum chunk, ended the first half of 2024 with a robust free cash flow of $8.5 billion. This suggests a solid financial position that likely contributed to its willingness to acquire these valuable spectrum assets.
The market reacted positively to the news, with USM shares soaring 11.9% to $65.71 at the last check on Friday. The sale to Verizon further strengthens the momentum surrounding US Cellular’s upcoming acquisition by T-Mobile, signaling a period of significant change and growth for the telecommunications landscape.