UScellular and TDS Announce Sale of Wireless Operations and select Spectrum Assets to T-Mobile for Approximately $4.4 Billion
CHICAGO, May 28, 2024 /PRNewswire/ -- United States Cellular Corporation ("UScellular") (NYSE: USM) and Telephone and Data Systems, Inc. ("TDS") (NYSE: TDS) today announced they have entered into a definitive agreement to sell UScellular's wireless operations and select spectrum assets to T-Mobile for a purchase price of $4.4 billion, including a combination of cash and up to approximately $2 billion of assumed debt. Under the terms of the agreement, T-Mobile will acquire UScellular's wireless operations and approximately 30% of spectrum assets across several spectrum bands. In addition, T-Mobile will enter into a new master license agreement ("MLA") on more than 2,000 towers. The agreement follows a thorough strategic review process announced in August 2023 and has been unanimously recommended by the independent directors of UScellular and unanimously approved by the boards of directors of both UScellular and TDS, an 83 percent shareholder of UScellular.
Lower Prices, Faster Speeds, and More Reliable Performance on T-Mobile's Nationwide 5G Network Committed to Serving Rural Americans
T-Mobile's purchase and integration of UScellular's wireless operations will provide more competitive choices for UScellular customers, as they will benefit from T-Mobile's greater resources and ability to provide lower prices, more robust plans, and a better network experience. Access to T-Mobile's 5G network, enhanced by UScellular's spectrum and tower assets, will provide immediate value to UScellular customers through better coverage, speed and access to T-Mobile's "Un-carrier" benefits including content offers, additional savings for seniors and robust customer service options.
"For over 40 years, UScellular has delivered on its mission of connecting people to what matters most, and this transaction will ensure customers have access to the level of service they deserve," said LeRoy T. Carlson, Jr., Chair of the Board of Directors of UScellular. "In the face of rising competition and increasing capital intensity required to keep pace with the latest technologies, and following our careful and deliberate strategic review, we are confident that continuing to deliver on our mission requires a level of scale and investment that is best achieved by integrating our wireless operations with those of T-Mobile. T-Mobile has the resources to provide UScellular's customers with an unparalleled network experience, lower prices and higher-quality services. We are pleased that T-Mobile also shares our commitment to bringing best-in-class connectivity to rural Americans, who today comprise nearly 40% percent of the population that UScellular serves."
"The decisions we announced today are in the best interests of our customers and our shareholders. T-Mobile is the right partner for our wireless operations and will ensure that customers have access to best-in-class wireless speeds and performance, including 5G and a nationwide network, at compelling prices," said Laurent Therivel, Chief executive Officer of UScellular. "We are committed to serving the needs of our customers and supporting our associates as we work to complete the transaction."
"This deal will create opportunity for T-Mobile to bring millions of UScellular customers lower prices and the Un-carrier's superior value on our best-in-class nationwide 5G network, offering much needed choice and more real competition across the wireless industry," said Mike Sievert, CEO of T-Mobile. "Bringing together UScellular's network resources with ours will enable us to fill gaps in connectivity that will create a better experience for all of our customers with more coverage and more capacity. And this is just some of the goodness this deal will bring. This will be a real win for consumers across the U.S."
Service Continuity and a Transformed UScellular Tower Business
In connection with the agreement, T-Mobile will enter into a new long-term MLA on a minimum of 2,015 incremental towers owned by UScellular and extend the lease term for the approximately 600 towers where T-Mobile is already a tenant. This will ensure continued, uninterrupted service for UScellular customers following the transaction and create a long-term contracted revenue stream from a strong anchor tenant for at least 15 years after the close of the transaction. With the inclusion of the towers occupied by other existing third-party tenants, UScellular's tower assets will represent one of the largest and most attractive tower businesses in the United States.
Retained Spectrum and Equity-Method Investments
UScellular retains approximately 70% of its spectrum portfolio across several spectrum bands and will seek to opportunistically monetize these retained assets.
UScellular also retains significant equity method investment interests, primarily from its wireless partnerships, that generated $158 million of equity method income and $150 million in distributions in 2023.
Other Transaction Details
T-Mobile expects to finance the transaction with existing cash on hand, and the consummation of the transaction is not subject to any financing contingencies. In connection with the transaction, T-Mobile expects to conduct an exchange offer under which holders of certain UScellular debt with a face value of approximately $2 billion will be offered the opportunity to participate in an exchange offer of their UScellular debt for T-Mobile debt. Specific details of the expected exchange offer will be provided in due course. The amount of any debt exchanged will serve to reduce the cash payable to UScellular. Further, up to $100 million of the cash purchase price is contingent on achieving certain financial and operational metrics between signing and closing. The purchase price is also subject to other potential adjustments, as specified in the purchase agreement.
UScellular anticipates being in a position to return capital to shareholders after the close of the transaction, but any decisions regarding capital allocation or use of proceeds will be made by the UScellular Board of Directors in due course.
In order to provide financial perspective on the impact of this transaction, in the next few months, UScellular expects to provide both pro forma financial statements regarding this transaction, and segment financial statements which show the results of UScellular's wireless operations and tower business separately.
The transaction has been unanimously recommended by the independent directors of UScellular and unanimously approved by the boards of directors of both UScellular and TDS. In addition, TDS, in its role as the 83 percent shareholder of UScellular, has delivered its written consent approving the transaction. No further action by UScellular's shareholders will be needed or solicited in connection with the transaction.
The transaction is expected to close in mid-2025, subject to the receipt of regulatory approvals and the satisfaction of customary closing conditions.
Advisors
Citigroup Global Markets Inc. is serving as lead financial advisor, Centerview Partners LLC is serving as financial advisor and Sidley Austin LLP is serving as lead legal advisor to TDS. TD Securities (USA) LLC and Wells Fargo are also serving as financial advisors to TDS for the transaction. PJT Partners LP is serving as financial advisor and Cravath, Swaine & Moore LLP is serving as legal advisor to the independent directors of UScellular. Clifford Chance LLP and Wilkinson Barker Knauer, LLP are also serving as legal regulatory advisors to UScellular and TDS for the transaction.
About UScellular
United States Cellular Corporation provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to customers with 4.5 million retail connections in 21 states. The Chicago-based company had 4,300 full- and part-time associates as of March 31, 2024. At the end of the first quarter of 2024, Telephone and Data Systems, Inc. owned approximately 83 percent of UScellular. For more information about UScellular, visit uscellular.com.
SOURCE United States Cellular Corporation
