UPDATE T-Mobile (NASDAQ: TMUS) and UScellular (NYSE: USM) want the FCC to approve its previously announced deal, whereby T-Mobile would acquire substantially all of UScellular’s wireless operations. UScellular recently told the Commission that a buyout of its operations is the only way forward.
In a meeting with FCC officials and representatives of UScellular and T-Mobile, the carriers underscored the transaction’s significance to both telecoms. “UScellular has consistently lost subscribers in recent years despite deploying a variety of strategies to attempt to arrest that decline,” states UScellular attorney Bryan Tramont of Wilkinson Barker Knauer, in a summary of the October 1 meeting.
The carrier expects that subscriber loss to continue. It’s also experiencing more competition from traditional wireless providers and cable wireless providers.
UScellular incurred what it calls “significant debt” to buy the mid-band spectrum needed to compete in 5G.
“Declining subscriber revenue means that the cash to pay back that debt needs to come from reduced spending in UScellular’s operations. As a result, UScellular has reduced spending on its network and foregone certain other investments,” Tramont explains.
UScellular says it’s been pulling back on its network investments while its competitors have increased their spending to expand their networks. This means UScellular “has fallen behind its competitors and the gap is continuing to grow,” writes Tramont.
T-Mobile said in May it plans to acquire most of UScellular for $4.4 billion. The deal includes the regional wireless carrier’s customers, stores and about 30 percent of its spectrum assets. Under the agreement, UScellular would retain 70 percent of its wireless spectrum and towers, leasing space on other towers to T-Mobile, Inside Towers reported.
The deal is said to include cash and “up to approximately $2 billion of assumed debt,” US cellular stated at the time. Up to $100 million of this cash is contingent on certain financial and operating metrics being met between signing and closing the deal, according to UScellular.
Parties predict the acquisition will close in mid-2025, though some Democratic Senators urged the FCC and the DoJ to scrutinize and possibly challenge the deal, due to market concentration, Inside Towers reported. If approved by regulators, UScellular customers can choose to remain on their current plan or switch to a T-Mobile plan.
By Leslie Stimson, Inside Towers Washington Bureau Chief
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