T-Mobile, Verizon in Talks to Carve Up U.S. Cellular
T-Mobile US and Verizon Communications are in discussions to carve up U.S. Cellular, one of the country’s last major regional wireless carriers, in separate transactions that would give both buyers access to valuable airwaves.
T-Mobile is closing in on a deal to buy a chunk of the regional carrier for more than $2 billion, taking over some operations and wireless spectrum licenses, according to people familiar with the matter.
The T-Mobile deal could be reached as soon as later this month, while discussions with Verizon on a separate transaction are expected to take longer or might not result in an agreement, the people said.
The split-sale structure is designed to convince antitrust authorities who will review the deal that the tie-up won’t hurt competition. U.S. authorities review wireless mergers market by market.
Verizon is the biggest U.S. cellphone carrier by subscribers, and T-Mobile became the second largest soon after it bought rival Sprint. T-Mobile gained more customers this month after it completed its purchase of Mint Mobile, an upstart brand.
U.S. Cellular offers wireless service to more than four million mostly rural customers across 21 states from Oregon to North Carolina. It also owns more than 4,000 cellular towers that weren’t part of the latest sale talks. The company has a market value of about $3 billion.
Members of the Chicago-based Carlson family control Telephone & Data Systems, which in turn owns 80% of U.S. Cellular. TDS last year put the wireless company’s operations on the block as it struggled with competition from national rivals and cable-broadband providers.
The rising value of wireless licenses is a driving force behind the deal. U.S. Cellular’s spectrum portfolio touches 30 states and covers about 51 million people, according to regulatory filings.
American companies have spent more than $100 billion in recent years to secure airwaves to carry high-speed fifth-generation, or 5G, signals and are hunting for more. But the Federal Communications Commission has lacked the legal authority to auction new spectrum for more than a year. The drought has driven up the price of spectrum licenses at companies that already hold them.
The U.S. wireless business has also matured: Carriers have sold a smartphone subscription to most adults and many children, which leaves less room for expansion as the country’s population growth slows. AT&T and Verizon have meanwhile retreated from expensive bets on the media business to focus on their core cellphone and home-internet customers.
A once-crowded field of small, midsize and nationwide cellphone carriers is now split among Verizon, T-Mobile and AT&T, leaving few players left to take over. As one of the last pieces left on the board, U.S. Cellular has long been an attractive takeover target.
Write to Drew FitzGerald at [email protected] and Lauren Thomas at [email protected]