United States Cellular Corporation
) has agreed to sell the majority of its Mississippi Valley
spectrum license to a wholly owned subsidiary of
T-Mobile US Inc.
). The deal - pending approval of the Federal Communications
Commission and Department of Justice - is slated to be completed
by 2013 end.
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Per the agreement, T-Mobile will shell out $308 million in cash
to purchase 10 MHz of Advanced Wireless Services (AWS) spectrum
license covering a population of almost 32 million across 29
markets. These include St. Louis; Nashville, Kansas City,
Memphis, Lexington, Little Rock-North Little Rock, Birmingham,
New Orleans and Louisville.
With this acquisition, T-Mobile will be able to deploy its 4G
Long Term Evolution (LTE) network on a bigger scale and at a
faster rate, adding more regions to its coverage. This will help
the company to provide smooth 4G connectivity to a broader base
of customers as well as fortify its position within the wireless
On the other hand, U.S. Cellular will continue to hold on to a
portion of the license spanning in Knoxville and eastern
Tennessee markets for future operating needs. This transaction is
part of the company's Market Divestiture program - announced in
Nov 2012 - under which it aims to divest non-strategic
less-profit generating assets.
In May, U.S. Cellular - an affiliate of
Telephone & Data Systems Inc.
) -successfully completed its spectrum sale in its Midwest
markets like Chicago and St. Louis to
). The $480 million cash deal also incorporates the handover of
approximately 585,000 customers, accounting for about 10% of U.S.
Cellular's customer base to Sprint.
We believe that U.S. Cellular is on track to enhance growth and
profitability by focusing on stronger markets. These spectrum
deals will allow the company to redefine its business model and
improve its cost structure, while managing network efficiency and
data delivery services.
Currently, both U.S. Cellular and T-Mobile carry Zacks Rank #3