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Telecom consolidation continues: T-Mobile and Verizon eye US Cellular next
- T-Mobile and Verizon are reportedly in talks to acquire US Cellular in separate deals.
- T-Mobile is already nearing a $2 billion deal for a significant portion of US Cellular.
- Verizon’s negotiations for the purchase of the remaining US Cellular assets are in an earlier stage.
Industry giants T-Mobile and Verizon are in discussions to purchase separate portions of regional carrier US Cellular, according to a recent Wall Street Journal report.
Sources close to the negotiations state that T-Mobile is already nearing the finalization of a $2 billion deal for a significant part of US Cellular. Simultaneously, Verizon is considering a purchase of the remaining assets, although discussions remain less advanced.
Notably, the potential deals will encompass US Cellular’s operations and spectrum licenses but exclude its roughly 4,000 cell towers, which are likely to be sold separately.
This strategic split-sale approach is likely intended to address potential antitrust concerns, a familiar hurdle in the highly consolidated US telecom market. Regulators typically assess wireless mergers on a market-by-market basis and segmenting US Cellular could help gain approval.
The US telecom industry has seen a steady trend of consolidation over the years. This has resulted in a market primarily dominated by three major network operators: T-Mobile, AT&T, and Verizon. This consolidation often harms customers in several ways.
Without robust competition, major carriers may feel less pressured to keep prices in check, leading to gradually increasing wireless bills. Additionally, consolidation can create a comfortable status quo for major players, reducing the incentive for rapid innovation and the introduction of new customer-centric technologies.
This competitive landscape, coupled with mobile virtual network operator (MVNO) agreements between many new smaller players and the big three, has made it increasingly difficult for regional operators like US Cellular to offer compelling prices along with strong service.
To address this challenge, US Cellular has leveraged aggressive promotions and negotiated virtual network access in regions where it doesn’t have its own towers. However, these strategies might not be enough to sustain long-term viability.
T-Mobile’s interest in US Cellular aligns with its recent aggressive expansion efforts. The operator recently closed a $1.3 billion deal, acquiring an estimated 3 million customers from Mint Mobile.