T-Mobile, after acquiring UScellular's
wireless operations and customers, will use its greater resources
to deliver benefits to UScellular customers, including lower
prices, more robust plans, superior network experiences, and more
added benefits
T-Mobile to enter into new MLA and be a
long-term tenant on at least 2,600 of
UScellular's towers
UScellular retains its nearly 4,400 owned
towers, its equity method investments, and approximately 70% of
spectrum assets
UScellular and TDS to hold conference call at
8:30 a.m. Central Time
CHICAGO, May 28, 2024
/PRNewswire/ -- United States Cellular Corporation ("UScellular")
(NYSE: USM) and Telephone and Data Systems, Inc. ("TDS") (NYSE:
TDS) today announced they have entered into a definitive agreement
to sell UScellular's wireless operations and select spectrum assets
to T-Mobile for a purchase price of $4.4
billion, including a combination of cash and up to
approximately $2 billion of assumed
debt. Under the terms of the agreement, T-Mobile will acquire
UScellular's wireless operations and approximately 30% of spectrum
assets across several spectrum bands. In addition, T-Mobile will
enter into a new master license agreement ("MLA") on more than
2,000 towers. The agreement follows a thorough strategic review
process announced in August 2023 and
has been unanimously recommended by the independent directors of
UScellular and unanimously approved by the boards of directors of
both UScellular and TDS, an 83 percent shareholder of
UScellular.
Lower Prices, Faster Speeds, and More Reliable Performance on
T-Mobile's Nationwide 5G Network Committed to Serving Rural
Americans
T-Mobile's purchase and integration of UScellular's wireless
operations will provide more competitive choices for UScellular
customers, as they will benefit from T-Mobile's greater resources
and ability to provide lower prices, more robust plans, and a
better network experience. Access to T-Mobile's 5G network,
enhanced by UScellular's spectrum and tower assets, will provide
immediate value to UScellular customers through better coverage,
speed and access to T-Mobile's "Un-carrier" benefits including
content offers, additional savings for seniors and robust customer
service options.
"For over 40 years, UScellular has delivered on its mission of
connecting people to what matters most, and this transaction will
ensure customers have access to the level of service they deserve,"
said LeRoy T. Carlson, Jr., Chair of
the Board of Directors of UScellular. "In the face of rising
competition and increasing capital intensity required to keep pace
with the latest technologies, and following our careful and
deliberate strategic review, we are confident that continuing to
deliver on our mission requires a level of scale and investment
that is best achieved by integrating our wireless operations with
those of T-Mobile. T-Mobile has the resources to provide
UScellular's customers with an unparalleled network experience,
lower prices and higher-quality services. We are pleased that
T-Mobile also shares our commitment to bringing best-in-class
connectivity to rural Americans, who today comprise nearly 40%
percent of the population that UScellular serves."
"The decisions we announced today are in the best interests of
our customers and our shareholders. T-Mobile is the right partner
for our wireless operations and will ensure that customers have
access to best-in-class wireless speeds and performance, including
5G and a nationwide network, at compelling prices," said
Laurent Therivel, Chief Executive
Officer of UScellular. "We are committed to serving the needs of
our customers and supporting our associates as we work to complete
the transaction."
"This deal will create opportunity for T-Mobile to bring
millions of UScellular customers lower prices and the Un-carrier's
superior value on our best-in-class nationwide 5G network, offering
much needed choice and more real competition across the wireless
industry," said Mike Sievert, CEO of
T-Mobile. "Bringing together UScellular's network resources with
ours will enable us to fill gaps in connectivity that will create a
better experience for all of our customers with more coverage and
more capacity. And this is just some of the goodness this deal will
bring. This will be a real win for consumers across the U.S."
Service Continuity and a Transformed UScellular Tower
Business
In connection with the agreement, T-Mobile will enter into a new
long-term MLA on a minimum of 2,015 incremental towers owned by
UScellular and extend the lease term for the approximately 600
towers where T-Mobile is already a tenant. This will ensure
continued, uninterrupted service for UScellular customers following
the transaction and create a long-term contracted revenue stream
from a strong anchor tenant for at least 15 years after the close
of the transaction. With the inclusion of the towers occupied by
other existing third-party tenants, UScellular's tower assets will
represent one of the largest and most attractive tower businesses
in the United States.
Retained Spectrum and Equity-Method Investments
UScellular retains approximately 70% of its spectrum
portfolio across several spectrum bands and will seek to
opportunistically monetize these retained assets.
UScellular also retains significant equity method
investment interests, primarily from its wireless
partnerships, that generated $158
million of equity method income and $150 million in
distributions in 2023.
Other Transaction Details
T-Mobile expects to finance the transaction with existing cash
on hand, and the consummation of the transaction is not subject to
any financing contingencies. In connection with the transaction,
T-Mobile expects to conduct an exchange offer under which holders
of certain UScellular debt with a face value of approximately
$2 billion will be offered the
opportunity to participate in an exchange offer of their UScellular
debt for T-Mobile debt. Specific details of the expected exchange
offer will be provided in due course. The amount of any debt
exchanged will serve to reduce the cash payable to UScellular.
Further, up to $100 million of the
cash purchase price is contingent on achieving certain financial
and operational metrics between signing and closing. The purchase
price is also subject to other potential adjustments, as specified
in the purchase agreement.
UScellular anticipates being in a position to return capital to
shareholders after the close of the transaction, but any decisions
regarding capital allocation or use of proceeds will be made by the
UScellular Board of Directors in due course.
In order to provide financial perspective on the impact of this
transaction, in the next few months, UScellular expects to provide
both pro forma financial statements regarding this transaction, and
segment financial statements which show the results of UScellular's
wireless operations and tower business separately.
The transaction has been unanimously recommended by the
independent directors of UScellular and unanimously approved by the
boards of directors of both UScellular and TDS. In addition, TDS,
in its role as the 83 percent shareholder of UScellular, has
delivered its written consent approving the transaction. No
further action by UScellular's shareholders will be needed or
solicited in connection with the transaction.
The transaction is expected to close in mid-2025, subject
to the receipt of regulatory approvals and the satisfaction of
customary closing conditions.
Advisors
Citigroup Global Markets Inc. is serving as lead financial
advisor, Centerview Partners LLC is serving as financial advisor
and Sidley Austin LLP is serving as lead legal advisor to TDS. TD
Securities (USA) LLC and Wells
Fargo are also serving as financial advisors to TDS for the
transaction. PJT Partners LP is serving as financial advisor and
Cravath, Swaine & Moore LLP is serving as legal advisor to the
independent directors of UScellular. Clifford Chance LLP and
Wilkinson Barker Knauer, LLP are also serving as legal regulatory
advisors to UScellular and TDS for the transaction.
Conference Call Information
UScellular and TDS will hold a joint conference call on
May 28, 2024, at 8:30 a.m. Central Time.
- Access the live call on UScellular Events & Presentations
or TDS Events & Presentations or at
https://events.q4inc.com/attendee/598119900
- Access the call by phone at (800) 715-9871 (U.S./Canada), conference ID: 2264212
Before the call, information to be discussed during the call
will be posted to UScellular Events & Presentations. The call
will be archived on UScellular Events & Presentations and TDS
Events & Presentations.
About UScellular
United States Cellular Corporation provides a comprehensive
range of wireless products and services, excellent customer
support, and a high-quality network to customers with 4.5 million
retail connections in 21 states. The Chicago-based company had 4,300 full- and
part-time associates as of March 31,
2024. At the end of the first quarter of 2024, Telephone and
Data Systems, Inc. owned approximately 83 percent of UScellular.
For more information about UScellular, visit uscellular.com.
Safe Harbor Statement Under the Private Securities
Litigation Reform Act of 1995: All information set
forth in this news release, except historical and factual
information, represents forward-looking statements. This includes
all statements about the company's plans, beliefs, estimates, and
expectations about the consummation and benefits of the proposed
transactions, including anticipated synergies, and T-Mobile's and
UScellular's plans, objectives, expectations and intentions, and
the expected timing of completion of the proposed transaction.
These statements are based on current plans, estimates,
projections, and assumptions, and the anticipated timing of
completion of the proposed transactions, which involve certain
risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Important
factors that may affect these forward-looking statements include,
but are not limited to: the failure to obtain, or delays in
obtaining, required regulatory approvals and the risk that such
approvals may be conditioned upon or result in the imposition of
terms or conditions that could adversely affect the expected
benefits of the proposed transaction; the failure to satisfy any of
the other conditions to the proposed transaction on a timely basis,
or at all; the occurrence of events that may allow one or more
parties to terminate the definitive agreement; the adverse effects
on UScellular's or T-Mobile's common stock and on UScellular's or
T-Mobile's operating results because of a failure to complete the
proposed transactions in the anticipated timeframe or at all;
adverse changes in the ratings of UScellular's or T-Mobile's debt
securities or adverse conditions or disruptions in the financial or
credit markets; negative effects of the announcement, pendency or
consummation of the transaction on UScellular's operating results,
including as a result of changes in key customer, supplier,
employee or other business relationships; significant transaction
costs and unknown liabilities; failure to realize the expected
benefits and synergies of the proposed transaction in the expected
timeframes or at all; costs or difficulties related to the
integration of UScellular's network and operations into T-Mobile;
the risk of litigation or regulatory actions, including antitrust
litigation; the risk that certain contractual restrictions
contained in the definitive agreement during the pendency of the
proposed transaction could adversely affect UScellular's ability to
pursue business opportunities or strategic transactions; effects of
changes in the state or federal regulatory environment in which
UScellular and T-Mobile operate; intense competition; the ability
of UScellular and T-Mobile to retain and attract people of
outstanding talent throughout all levels of the organization; the
ability of UScellular to obtain or maintain leases for its towers;
advances in technology; the ability of the company to successfully
construct and manage its towers; difficulties involving third
parties with which UScellular does business; uncertainties in
UScellular's future cash flows and liquidity and access to the
capital markets; the ability to make payments on UScellular
indebtedness or comply with the terms of debt covenants; changes in
tax rules or pronouncements; the possibility that the Board of
Directors of UScellular will not declare dividends; conditions in
the U.S. telecommunications industry; the value of assets and
investments; pending and future litigation; cyber-attacks or other
breaches of network or information technology security; potential
conflicts of interests between TDS and UScellular; deterioration of
U.S. or global economic conditions; unpredictability and severity
of catastrophic events, including but not limited to acts of
terrorism, war or hostilities, as well as management's response to
any of the aforementioned factors; and the impact, duration and
severity of public health emergencies. Investors are encouraged to
consider these and other risks and uncertainties that are more
fully described under "Risk Factors" in the most recent filing of
UScellular's Form 10-K.
Additional Information and Where to Find It
UScellular will prepare an information statement on Schedule 14C
for its shareholders with respect to the approval of the
transaction described herein. When completed, the information
statement will be mailed to UScellular's shareholders. You may
obtain copies of all documents filed by UScellular with the SEC
regarding this transaction, free of charge, at the SEC's website,
www.sec.gov or from UScellular's website at
https://investors.uscellular.com.
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SOURCE United States Cellular Corporation