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T-Mobile has agreed to a blockbuster deal to acquire a majority stake in USCellular worth an estimated $4.4 billion.
As part of the agreement, T-Mobile will pay cash and settle up to $2 billion of USCellular's debt, depending on the agreement reached between T-Mobile and US Cellular's creditors at closing.
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The new contract gives USCellular customers access to T-Mobile's 5G technology, existing plans and customer service. Areas previously covered by USCellular will now also be accessible to existing customers through T-Mobile.
T-Mobile said the merger would increase competition among other rival companies.
“This deal will enable T-Mobile to extend the superior Un-carrier value and experiences we are famous for to millions of U.S. wireless customers, offering them cheaper, lower-cost plans and better connectivity on our best-in-class nationwide 5G network,” T-Mobile CEO Mike Sievert said in a company press release. “As customers of both companies get more coverage and more capacity through our combined reach, our competitors will be forced to keep up – and even more consumers will benefit.”
USCellular said in a separate press release that the new agreement would see all of its wireless operations transferred to T-Mobile, including those in “underserved” and “rural” areas that previously had weak connectivity.
“The decisions announced today are in the best interests of our customers and shareholders,” said Laurent Therivel, CEO of UScellular. “We are committed to meeting the needs of our customers and supporting our partners as they complete the transaction.”
USCellular's independent directors unanimously recommended T-Mobile's acquisition of USCellular, and the boards of directors of USCellular and TDS, which owns 83% of USCellular's stock, unanimously approved it.
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T-Mobile had a strong first quarter of 2024, reporting net income of $2.4 billion, up 22% from the same period last year. The wireless company also reported a 4% year-over-year increase in service revenue, estimated at $16.1 billion.
“Our model works. It is consistent. And our confidence in it grows with each successful quarter,” Sievert said in an earnings call at the time. “We remain focused on gaining market share in the wireless and broadband space while delivering industry-leading growth in service revenue, profitability and cash flows.”
USCellular rose more than 12% within 24 hours after the acquisition was announced late Tuesday afternoon.
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