UScellular strikes $1bn spectrum deal with Verizon amid broader monetization strategy

UScellular, officially known as United States Cellular Corporation (NYSE: USM), announced a significant agreement to sell select spectrum licenses to Verizon Communications Inc. (NYSE: VZ). The $1.0 billion deal is part of UScellular’s plan to capitalise on its remaining spectrum assets, with the company also engaging two other mobile network operators for additional sales. This strategic move follows the announcement made in May 2024 to monetise assets not included in its proposed sale to T-Mobile.

The agreement involves UScellular selling 663 million MHz POPs of its Cellular (850 MHz) spectrum, 11 million MHz POPs of AWS spectrum, and 19 million MHz POPs of PCS licenses to Verizon. The deal, payable in cash, remains subject to regulatory approval and standard closing conditions. Furthermore, UScellular disclosed agreements with two other telecom firms for the sale of 12 million MHz POPs, encompassing CBRS, C-Band, and 700 MHz bands. Details of these additional transactions remain undisclosed, pending approvals.

Spectrum Strategy and Market Response

Laurent C. Therivel, President and CEO of UScellular, expressed satisfaction with the realised value of the remaining licenses and stressed the importance of deploying these resources effectively for consumers. The company continues exploring monetisation opportunities for its other spectrum assets not yet part of existing deals. After these transactions, UScellular will retain 3.4 billion MHz POPs in low and mid-band spectrum and 17.2 billion MHz POPs in mmWave spectrum.

United States Cellular Corporation’s stock price recently closed at approximately $56.10. Analysts forecast a potential upside, with price targets reaching up to $72.0, representing an 11% growth opportunity for investors.

Expert Insight: The Competitive Spectrum Race

Telecom experts highlight that UScellular’s move signals aggressive spectrum optimisation, a crucial step for telecom operators vying for dominance in the 5G race. Verizon’s acquisition expands its capacity, reinforcing its 5G network infrastructure as competition with T-Mobile intensifies. Analysts suggest that spectrum management and efficient monetisation will be pivotal for UScellular’s future financial performance, especially as the broader telecom industry consolidates.

Advisory and Legal Support

The transaction is supported by Citigroup Global Markets Inc., the lead financial advisor, with additional financial support from Centerview Partners LLC, TD Securities, and Wells Fargo. Legal counsel includes Wilkinson Barker Knauer for FCC regulatory matters, Clifford Chance LLP for overall regulatory advice, and Sidley Austin LLP advising TDS. PJT Partners LP and Cravath, Swaine & Moore LLP are guiding the independent directors of UScellular.

About UScellular

United States Cellular Corporation is a Chicago-based telecom provider serving 4.5 million retail connections across 21 states. As of Q2 2024, it employed 4,300 associates. Telephone and Data Systems, Inc. (TDS) holds an 82% ownership stake, influencing strategic decisions like the recent spectrum sale.