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T-Mobile To Acquire UScellular Wireless Ops Using Cash And Debt Exchange

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  • T-Mobile acquiring UScellular’s wireless ops including wireless customers and stores and ~30% of their spectrum assets for USD 4.4bn.
  • To be paid for via cash (USD 6.7bn at FY23) and by assuming up to USD 2bn of UScellular debt via an exchange offer prior to closing. Cash amount to be adjusted to the extent debtholders don’t participate in the exchange. USD 100mn of the cash amount is target-dependent. Transaction expected to close in mid-2025.
  • UScellular to retain the remaining spectrum and towers and T-Mobile will enter LT leases on at least 2,015 of the retained towers while extending terms on the roughly 600 towers already leased.
  • No impact on TMUS 2024 guidance. Expected USD 1bn annual synergies post-integration against integration costs: USD 2.2-USD 2.6bn.
  • TMUS net debt at FY23 stood at USD 72.4bn to give a ND to Core Adj. EBITDA of 2.5x implying the USD 4.4bn consideration is roughly 0.15x turns.
  • Deal makes sense to us from an operational viewpoint - UScellular is one of the last major regional Telcos and represents an opportunity to add subscribers in an area with typically lower penetration from the big service providers though any benefits will be weighed against the increased leverage.
  • T-Mobile EUR spreads have moved slightly wider on the announcement though remain muted on the day.
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  • T-Mobile acquiring UScellular’s wireless ops including wireless customers and stores and ~30% of their spectrum assets for USD 4.4bn.
  • To be paid for via cash (USD 6.7bn at FY23) and by assuming up to USD 2bn of UScellular debt via an exchange offer prior to closing. Cash amount to be adjusted to the extent debtholders don’t participate in the exchange. USD 100mn of the cash amount is target-dependent. Transaction expected to close in mid-2025.
  • UScellular to retain the remaining spectrum and towers and T-Mobile will enter LT leases on at least 2,015 of the retained towers while extending terms on the roughly 600 towers already leased.
  • No impact on TMUS 2024 guidance. Expected USD 1bn annual synergies post-integration against integration costs: USD 2.2-USD 2.6bn.
  • TMUS net debt at FY23 stood at USD 72.4bn to give a ND to Core Adj. EBITDA of 2.5x implying the USD 4.4bn consideration is roughly 0.15x turns.
  • Deal makes sense to us from an operational viewpoint - UScellular is one of the last major regional Telcos and represents an opportunity to add subscribers in an area with typically lower penetration from the big service providers though any benefits will be weighed against the increased leverage.
  • T-Mobile EUR spreads have moved slightly wider on the announcement though remain muted on the day.