On October 1, top UScellular execs and a T-Mobile representative met with members of the Federal Communications Commission (FCC) to explain why the latter should be allowed to buy the former’s operations.
In May, T-Mobile revealed its intention to purchase UScellular’s wireless operations, its customers, and 30 percent of its spectrum assets. The company also wants to lease some of the towers owned by UScellular.
In September, T-Mobile made its case for why the transaction should be allowed to go through. And now, UScellular has explained why it wants to offload most of its operations to T-Mobile.
Based on handset connections, UScellular is the seventh-largest wireless provider in the US. In the grand scheme of things, the ranking is hardly impressive as the company only accounts for one percent of connections.
UScellular says that it’s struggling to keep up with the competition and has been consistently losing subscribers. The strategies the company has employed to turn things around aren’t working and it expects to continue bleeding subscribers.
The company feels stuck in a cycle of operational and financial challenges and doesn’t see a way out of them.
Competitive intensity has ramped up in UScellular’s footprint, with both traditional wireless providers and cable wireless providers increasing their competitive presence. That intensity has, in turn, led to aggressive pricing and promotions—and further challenged UScellular’s subscriber numbers and financials.UScellular took on significant debt to purchase the mid-band spectrum needed to compete in 5G. Declining subscriber revenue means that the cash to pay back that debt needs to come from reduced spending in UScellular’s operations. As a result, UScellular has reduced spending on its network and foregone certain other investments.
UScellular, October 2024
The proposed transaction will be beneficial for customers of both companies as the spectrum and assets owned by the two companies will be combined, resulting in an improved network experience and faster speeds.
While UScellular customers will be allowed to remain on their current plans, which the company notes aren’t as aggressively priced as those offered by competitors, they will have the option of switching to more affordable T-Mobile plans.
The transaction will also allow T-Mobile to offer its home internet services to UScellular customers, most of whom reside in rural areas. This will bring more competition and choice to rural areas.
While consolidation of spectrum assets will undoubtedly improve the quality of service for both T-Mobile and UScellular customers if the transaction is allowed to go through, critics might argue that it’s only going to make T-Mobile more powerful. T-Mobile has recently been on an acquisition spree and some politicians have cautioned that its purchase of UScellular operations would raise costs for customers and limit choices.
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