T-Mobile's CEO delivers the latest update on the $4.4 billion purchase of most of UScellular
Back in May of this year, T-Mobile agreed to acquire spectrum, customers, and network assets from UScellular, the fifth largest wireless provider in the U.S., for $4.4 billion in cash and assumed debt. "With this deal T-Mobile can extend the superior Un-carrier value and experiences that we’re famous for to millions of UScellular customers and deliver them lower-priced, value-packed plans and better connectivity on our best-in-class nationwide 5G network," T-Mobile CEO Mike Sievert said at the time the deal was announced.
It is now nearly five months later and following the recent release of the carrier's impressive third-quarter earnings report, Sievert addressed the media listening in to the company's conference call with an update on the deal. The CEO says that he expects the deal to close by the middle of 2025. He also pointed out that T-Mobile is still in the "planning phase" with UScellular as each company's counterparts are getting together to ensure that everything proceeds smoothly on the day the acquisition closes. "We've met the teams. They're fired up," Sievert stated.
T-Mobile CEO Sievert says that UScellular users will have better service and lower prices after the deal is approved.
T-Mobile's CEO said that UScellular customers will have a better network experience once T-Mobile takes control of the airwaves, subscribers, and network gear it is buying from UScellular. The latter provides wireless service mostly to Americans living in rural areas of the country. Besides experiencing better wireless service, Sievert says that UScellular customers will enjoy having to pay lower prices as they move over to T-Mobile's plans and services.
Once the FCC approves the acquisition, UScellular stores such as this one in Middleton, Wisconsin will be owned by T-Mobile. | Image credit-UScellular
Since the deal has yet to receive the required thumbs up from the FCC regulatory agency, Sievert still has to be careful what he says about the transaction in public forums. "We’re very confident, but we have to keep our heads down and go through the process and explain our case to all the parties involved," the executive says.
With the deal, T-Mobile will take over 30% of UScellular's spectrum, the carrier's subscribers (located mostly in rural parts of the country), retail locations, and its network assets. The spectrum that T-Mobile is acquiring from UScellular includes low-band 600MHz airwaves that travel long distances but deliver slower data speeds. T-Mobile already uses 600MHz spectrum for its nationwide 5G service. The deal also includes some 700MHz low-band spectrum, 2.5GHz mid-band airwaves, and 24GHz millimeter wave (mmWave) spectrum.
Acquiring Sprint's 2.5GHz mid-band spectrum was the main reason why T-Mobile purchased Sprint for $26.5 billion in a deal that closed in April 2020. This spectrum doesn't travel as far as low-band airwaves but does cover more ground than mmWave signals. It is approximately 10 times faster than low-band but is not as fast as mmWave. These characteristics have earned the airwaves the title of "Goldilocks spectrum."
T-Mobile's shares hit a new all-time high today before reversing
AT&T and Verizon started building out their respective 5G services with mmWave to take advantage of the faster download data speeds. However, they failed to take the limited range of high-band signals into consideration and watched as T-Mobile's decision to build out its 5G service using mid-band spectrum helped it become the early 5G leader in the U.S. AT&T and Verizon eventually came to the conclusion that they made a mistake and spent $68 billion between the two of them to win mid-band spectrum in an FCC auction.
Even though mmWave spectrum is not used much by T-Mobile, the deal with UScellular includes some 24GHz mmWave spectrum that T-Mobile can employ when needed.
After hitting a new all-time high earlier in the day at $234.56, sellers are making Mike Sievert sad as T-Mobile's shares have reversed and are now down $7.46 on the day, or 3.19% to $226.10. The stock is still up 39.65% for 2024 to date. There have been many complaints from T-Mobile subscribers that the carrier has shifted its focus from subscribers to stockholders.
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