UScellular: Intense Competition, Debt Drove Decision to Sell to T-Mobile
Officials from UScellular made their case to the FCC last week
Jericho Casper
WASHINGTON, Oct. 7, 2024 – Officials from UScellular made the rounds at the Federal Communications Commission last week to sell their decision to merge with T-Mobile in a $4.4 billion deal announced in late May.
On Oct. 1, UScellular CEO Laurent Therivel, along with other company executives, met with FCC Chairwoman Jessica Rosenworcel, three commissioners, and numerous staff members to advocate for the approval of the merger, saying dire financial and operational conditions led to its decision to sell much of its wireless business.
After exploring strategic alternatives, UScellular concluded it could not overcome the structural disadvantages of its footprint or scale. It determined that the transaction with T-Mobile was the best path forward, the company said in a filing with the FCC.
UScellular has suffered significant subscriber losses, a trend that accelerated in 2022 despite heavy promotional spending. The company’s struggles weren’t just a result of competition from major carriers like AT&T and Verizon, but also from the rising influence of cable companies entering the mobile market.
Comcast and Charter, for example, reported significant subscriber growth in Q2 2024. Comcast added 322,000 wireless subscribers, while Charter brought in 557,000 new mobile lines, signaling an intensifying competitive landscape.
The company's financial struggle was exacerbated by debt incurred from mid-band spectrum purchases to compete in 5G. Declining revenue hampered UScellular’s ability to invest in network improvements, leaving it unable to compete with rivals. As a result, UScellular said it was falling behind in network quality and customer experience.
As part of the proposed merger, T-Mobile will acquire approximately 30% of UScellular’s spectrum and take on all of its 4 million customers. UScellular will retain ownership of nearly 4,400 towers, leasing over 2,000 of them to T-Mobile under a 15-year agreement.
While UScellular acknowledged these financial difficulties, it argued that the merger will benefit both companies’ customers, by delivering better coverage and faster speeds.
This reflects the mid-September merger application, in which UScellular noted that its rate plans were typically more expensive than those of T-Mobile. The company emphasized that after the merger, customers would be able to pay the same or even less while receiving improved service quality.
