US cellular / T-Mobile - What's next?

Oct 17, 2024

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T-Mobile made a significant announcement in May of 2024, announcing an agreement to acquire US Cellular's wireless business and a portion of its spectrum.

US cellular / T-Mobile Transaction, then until now (10/17/2024)

8/4/2023 - UScellular - Telephone and Data Systems and UScellular Announce Exploration of Strategic Alternatives for UScellular

5/24/24 - Securities Purchase Agreement signed by TMUS and US cellular/TDS

5/28/24 - UScellular - UScellular and TDS Announce Sale of Wireless Operations and Select Spectrum Assets to T-Mobile for Approximately $4.4 Billion in Cash and Assumed Debt

T-Mobile to purchase US cellular wireless operations and customers
T-Mobile to purchase 28% of US cellular spectrum
T-Mobile to enter into a 15-year minimum term to lease an additional 2,015 towers from US cellular, in addition to the ~600 they are already on, from the ~4,500 cell towers owned by US cellular
For one year after closing US cellular to lease spectrum to T-Mobile, including spectrum to ensure seamless transition of customer from US cellular to the T-Mobile Network

7/22/24 Final - Warren Letter to DOJ and FCC re T-Mobile_USCellular merger (senate.gov )

Letter from well-known U.S. Senators to "closely scrutinize" the transaction

7/26/24 – Schedule 14C Information statement released to the public

Detail about the transaction, and timeline of how it all came together
Interesting detail about high level corporate activities and business negotiations

8/2/24 – USM (US cellular) Q2/2024 Earnings Call & Analyst Discussion

9/13/24 - Description of Transaction, Public Interest Statement, and Related Demonstrations – by T-Mobile and US cellular

10/1/24 – US cellular leadership, legal counsel, and T-Mobile legal counsel meet with FCC Members

10/3/24 – Letter to FCC detailing discussion of 10/1/24 meeting

4 of 5 FCC Commissioners listed, Office of Commissioner Gomez is not listed on the documentation

US cellular / T-Mobile Transaction, what is next?

T-Mobile and US cellular have announced they expect the transaction to close in mid-2025
Initial Termination Date of the Agreement is November 24, 2025, with 2 x 6 month extensions
The language contemplates potential of denial or delay via FCC and/or litigation

US cellular still plans to monetize the remaining 72% of it's spectrum
- TBD: An outright sale to other wireless carriers, or to a private equity company such as Colombia Capital?
US cellular will retain its portfolio of cell towers, continuing to market them for collocation
- TBD: Will US cellular hold the portfolio long term, and operate as a tower company while it adds tenants and value?
- TBD: Will large players make a bid to acquire this portfolio? (American Tower, Crown Castle, SBA, Vertical Bridge?)
- Might US cellular be able to compete with existing tower owners in certain areas where they have cold steel locations, and provide attractive relocation terms for the major wireless carriers?
Presently the FCC is composed of 3 Democrat appointed commissioners, and 2 Republican appointed commissioners
- What will the impact of the upcoming election be on the future make-up of the FCC?
- Chairwoman Rosenworcel (Dem. appointed) and Commissioner Simington (Rep. appointed) terms expire in 2025
The nationwide impact of this transaction appears to be regionalized (US cellular native coverage shown below), and in rural areas
- It is our opinion that it is more likely than not that this transaction will be approved, whether that would be in 2025 or 2026 is TBD