T-Mobile's $4.4B US Cellular And TDS Deal Promises Enhanced Rural 5G Coverage

Zinger Key Points
  • T-Mobile to acquire US Cellular's wireless operations for $4.4 billion, expanding 5G network to rural areas.
  • T-Mobile to lease space on 2,100 additional towers, with expected $1 billion in annual cost synergies from the deal.

T-Mobile US, Inc TMUS  agreed to acquire substantially all of United States Cellular Corp’s USM and Telephone and Data Systems, Inc. TDS wireless operations, including wireless customers and stores, as well as certain specified spectrum assets for $4.4 billion in the transaction in a combination of cash and up to $2.0 billion of debt.

Under the contract, T-Mobile’s 5G network will expand to provide millions of US cellular customers, particularly those in underserved rural areas.

Under the deal, UScellular will retain ownership of its other spectrum and towers, and T-Mobile will enter into a long-term arrangement to lease space on at least 2,100 additional towers. 

Also Read: Wireless Giants T-Mobile, Verizon Consider $2B US Cellular Deal: Report

T-Mobile expects this transaction to yield $1.0 billion in effective total operating expenditure and capital expenditure annual run rate cost synergies upon integration, with the total cost to achieve the integration currently estimated at $2.2 billion – $2.6 billion.

Mike Sievert, CEO of T-Mobile. “As customers from both companies will get more coverage and more capacity from our combined footprint, our competitors will be forced to keep up – and even more consumers will benefit.”

In April, T-Mobile US reported first-quarter sales of $19.59 billion, down by 0.19% year-on-year, which missed the analyst consensus of $19.81 billion. 

It clocked EPS of $2.00, which beat the analyst consensus of $1.89. The company reported quarterly postpaid net account additions of 218,000.

Price Action: TMUS shares traded lower by 0.28% at $165.53 premarket at the last check Tuesday. TDS shares were up 17.2% at $22, and USM shares were trading higher by 12.80% to $48.50.

Also Read: Microsoft’s Move in Telecom – 5G Partnership with Etisalat and AI Innovations Reshape Industry

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