TDS considers ‘strategic alternatives’ for UScellular


UScellular’s owner Telephone and Data Systems (TDS) says it may consider putting the underperforming mobile operator up for auction

This week, reports suggest that UScellular’s parent company TDS are considering “strategic alternatives” for the mobile company, which could include a full sale or the onboarding or new investors.

TDS said that it has begun a strategic review of UScellular, hiring investment firm Citi act as financial advisors in exploring their options for the business.

“The TDS board believes that now is the right time for a comprehensive review of strategic alternatives for U.C. Cellular. We will pursue the pathway that is in the best interest of shareholders,” said Walter C.D. Carlson, Chairman of the TDS Board.

“There is no deadline or definitive timetable set for completion of the strategic review, and there can be no assurance regarding the results or outcome of this review. TDS and UScellular do not intend to comment further on the strategic review process, and we’ll make further announcements as appropriate,” added TDS CFO Vicki Villacrez on a subsequent earnings call.

UScellular is the fifth largest mobile service provider in the US, with roughly 4.2 million subscribers across the 21 states. It currently employs around 4,600 people and has a market capitalisation of roughly $2.65 billion.

Who exactly would seek to purchase UScellular remains unclear, but the most likely candidates are surely the US telco giants T-Mobile, Verizon, or AT&T. These companies not only have pockets deep enough to make such a purchase but could also put the UScellular’s assets to good use – particularly its spectrum holdings.

UScellular spent over a billion dollars on 5G spectrum in the latest spectrum auction, much of which could be used to bolster the larger operators’ existing 5G services.

In addition to its valuable spectrum holdings, UScellular also owns 4,341 mobile towers across the US, assets that have been highly prized by both telcos and private equity investors alike in recent years.

On the other hand, the company’s somewhat disjointed footprint – as seen below – could make it less appealing to an individual buyer.

Source: TDC

As such, it is feasible that UScellular would be of most value to TDS if it were to be sold piecemeal, with its consumer business being offloaded to one of the major telcos and its tower infrastructure to a towerco or a private equity investor.

One final possibility worth mentioning here is that of UScellular being acquired by Dish Network. While this move would certainly go a long way towards helping Dish meet its 5G coverage obligations from the Federal Communications Commission, Dish’s poor financial health likely precludes such a deal, with the operator saying earlier this year that it was “desperate” to raise funds for its 5G rollout.

Besides, as of today, the company is likely to have its hands full, having announced plans to merge with sister company EchoStar.

How is the US mobile market evolving in 2023? Join the telecoms ecosystem in discussion at Connected America 2024?

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Source: TDS

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