CHICAGO - United States Cellular Corporation (NYSE:USM), commonly known as UScellular, has agreed to sell a portion of its spectrum licenses to Verizon Communications Inc. (NYSE, Nasdaq: NYSE:VZ) for $1 billion in cash. This transaction is part of UScellular's previously announced strategy to monetize spectrum assets.
The deal with Verizon involves the sale of 663 million MHz POPs of UScellular's Cellular (850 MHz) spectrum licenses, along with 11 million MHz POPs of its AWS and 19 million MHz POPs of its PCS licenses. The agreement is awaiting regulatory approvals and the fulfillment of standard closing conditions.
In parallel, UScellular has struck deals with two other mobile network operators for the sale of 12 million MHz POPs of spectrum across the CBRS, C-Band, and 700 MHz B/C Block bands. The identities of these buyers and the terms of the agreements have not been disclosed, but these sales are also subject to regulatory consent and customary closing conditions.
The completion of each of these sales is contingent upon the closure of the proposed transaction where UScellular intends to sell its wireless operations and certain spectrum assets to T-Mobile.
Following these divestitures, UScellular will retain approximately 3.4 billion MHz POPs of low and mid-band spectrum and 17.2 billion MHz POPs of mmWave spectrum. The company continues to explore opportunities to monetize these remaining assets.
Telephone and Data Systems, Inc. (TDS), which owns approximately 82% of UScellular, has given its written consent for the Verizon transaction, negating the need for further shareholder approval.
UScellular is a wireless service provider with 4.5 million retail connections across 21 states and employed 4,300 people as of June 30, 2024. The company is continuing its efforts to optimize its spectrum portfolio.
Advisory services for the transactions are being provided by Citigroup Global Markets Inc., Centerview Partners LLC, TD Securities (USA) LLC, Wells Fargo, Wilkinson Barker Knauer, Clifford Chance LLP, Sidley Austin LLP, PJT Partners (NYSE:PJT) LP, and Cravath, Swaine & Moore LLP.
This article is based on a press release statement and includes forward-looking statements subject to risks and uncertainties that could cause actual outcomes to differ materially from those anticipated.
In other recent news, US Signal Company, LLC has significantly broadened its digital infrastructure capabilities through the acquisition of OneNeck IT Solutions LLC and OneNeck Data Center Holdings LLC. The acquisition expands US Signal's data center footprint and enhances its service offerings, now operating 16 data centers and extending its reach to the West Coast. This growth more than triples the commercial power under US Signal's management.
In parallel, Wall Street firms, including TD Securities, BNY Mellon (NYSE:BK), and Truist, have settled with U.S. regulators for over $470 million due to violations of recordkeeping rules. The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) announced these settlements, marking a significant enforcement initiative.
Furthermore, TDS (Telephone and Data Systems, Inc.) and its subsidiary UScellular reported robust financial improvements for Q2 2024, characterized by double-digit growth in adjusted EBITDA and a significant increase in free cash flow. They have also announced a pending transaction with T-Mobile for the sale of their wireless operations, while UScellular is set to retain key assets. These are recent developments highlighting the dynamic nature of the business environment.
InvestingPro Insights
As UScellular moves forward with its spectrum monetization strategy, it's worth examining the financial health of its parent company, Telephone and Data Systems, Inc. (TDS). According to InvestingPro data, TDS has a market capitalization of $2.88 billion, which provides context for the $1 billion spectrum sale to Verizon.
InvestingPro Tips reveal that TDS has maintained dividend payments for an impressive 51 consecutive years, demonstrating a long-term commitment to shareholder returns. This could be reassuring for investors concerned about the impact of UScellular's asset sales on TDS's financial stability.
However, it's important to note that TDS is currently trading at a high EBIT valuation multiple, which may indicate that the market has already priced in expectations for the company's future performance, including potential benefits from UScellular's strategic moves.
The company's revenue for the last twelve months as of Q2 2023 stood at $5.09 billion, with a revenue growth of -4.31% over the same period. This decline in revenue might explain why UScellular is pursuing asset sales to optimize its portfolio and potentially improve its financial position.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide a deeper understanding of TDS's financial outlook in light of these strategic changes.
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