US Cellular has announced an agreement to sell select spectrum licenses to the telecommunications giant Verizon Communications for a staggering $1 billion in cash, with adjustments possible based on various factors. This strategic move is part of US Cellular's broader strategy to monetize the spectrum assets that were excluded from its previous agreement with T-Mobile US.
Under the previous arrangement, T-Mobile agreed to acquire US Cellular's wireless operations and select spectrum assets valued at $4.4 billion. Chief Executive Laurent Therivel expressed optimism regarding the deal, stating, "We are pleased that significant value for a portion of the remaining licenses will be realized.
We are continuing the process to opportunistically monetize the remaining spectrum assets not included in today's announcement." Additionally, US Cellular is also in the process of selling certain spectrum licenses to two other mobile network operators. The company has secured approval from its major shareholder, Telephone and Data Systems, which holds an 82% stake in US Cellular. The market reacted positively to the news, with US Cellular shares rising by 10% during trade on Friday, while Telephone and Data Systems saw an impressive jump of nearly 17%.
Verizon, although experiencing a modest increase of 0.4%, did not provide comments on the developments when approached by MT Newswires. The transaction with Verizon encompasses a comprehensive spectrum portfolio that includes 663 million MHz POPs of cellular spectrum licenses, 11 million MHz POPs of AWS, and 19 million MHz POPs of PCS licenses.
As per usual industry practices, the deal also requires regulatory approvals before it can be officially completed. In addition to the agreement with Verizon, the transactions involving the two other mobile network operators comprise 12 million MHz POPs of spectrum licenses that span across the CBRS, C-Band, and 700 MHz B/C Block bands, although the buyers and specific terms have not been disclosed at this time. Importantly, these spectrum deals are contingent on the successful completion of US Cellular's earlier transaction with T-Mobile.
Once finalized, US Cellular’s spectrum portfolio is projected to illustrate a robust 3.4 billion MHz POPs of low- and mid-band spectrum, in addition to 17.2 billion MHz POPs of mmWave spectrum. In a related development, Verizon recently agreed to a significant $3.3 billion deal with Vertical Bridge, granting them exclusive rights to lease, operate, and manage thousands of Verizon's wireless communications towers throughout the United States.
Earlier this month, Verizon also disclosed an agreement to acquire Frontier Communications Parent in a cash deal valued at approximately $20 billion. Investors are particularly attentive to Verizon as the company gears up to report its third-quarter financial results this coming Tuesday. Price: 65.10, Change: +6.39, Percent Change: +10.88.