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U.S. Cellular's shares jumped more than 10% in trading before
the bell and comes nearly ten months after the company said it
was exploring strategic options.
U.S. Cellular will retain ownership of about 70% of its
spectrum, its equity-method investments as well as 4,400 telecom
towers. It said T-Mobile will become a long-term tenant on at
least at least 2,600 towers.
T-Mobile, which eyes improved coverage for its customers, will
fund the deal in a combination of cash and up to $2 billion of
debt to be assumed through an exchange offer to be made to some
of U.S. Cellular's debtholders.
T-Mobile does not expect any impact on its financial forecast or
shareholder return program for 2024. It expects an yield of
about $1 billion in operating expense and capital spending cost
synergies.
The deal is expected to close in mid-2025 after regulatory
approvals, and shareholders are not expected to act on this
deal, U.S. Cellular said.
It added that Telephone and Data Systems, which is a 83%
shareholder of the regional carrier, has provided written
consent approving the deal.
If the deal fails to go through, T-Mobile will pay U.S. Cellular
a termination fee of $60 million, Telephone and Data Systems
said in a filing.
Verizon was in talks to also buy parts of the regional carrier,
the Wall Street Journal reported earlier this month.
(Reporting by Arsheeya Bajwa and Akash Sriram in Bengaluru;
Additional reporting by Harshita Mary Varghese; Editing by Vijay
Kishore, Savio D'Souza and Shailesh Kuber)
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