Sprint To Buy U.S. Cellular’s Spectrum & 10% Of Cust. Base For $480M

Sprint To Buy U.S. Cellular’s Spectrum & 10% Of Cust. Base For $480M
By Sprint Nextel [Public domain], via Wikimedia Commons

Sprint Nextel Corporation (NYSE:S) agreed to buy the PCS spectrum and its 585,000 customers in the Midwest markets (10% of total customer base) of United States Cellular Corporation (NYSE:USM) for $480 million.

Sprint To Buy U.S. Cellular's Spectrum & 10% Of Cust. Base For $480M

Based on the terms of the agreement, Sprint will acquire 30 MHz of PCS spectrum in the 1900 MHz band in Chicago, St. Louis, Central Illinois, and other selected markets in the Midwest.

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According to U.S. Cellular, the sale is part of the company’s strategy to focus its resources in areas where it has a strong market position, to boost its competitiveness, and capability for a long-term growth.

In a statement, Mary N. Dillon, president and CEO of U.S. Cellular, said, “In the dynamic wireless marketplace, we have a clear strategy to accelerate profitable growth and increase return on investment over the long term, and we are taking decisive steps to achieve it.”

U.S. Cellular said some of its retail stores included in the transaction will remain open during the transition period, and it will provide certain transition services for Sprint. The company will continue to employ more than 1,400 associates in its headquarters and other facilities in Chicago and other surrounding suburbs.

On the other hand, Dan Hesse, chief executive officer of Sprint Nextel Corporation (NYSE:S), said the acquisition of the spectrum will increase the company’s network capacity. According to him, “Acquiring this spectrum will significantly increase Sprint’s network capacity and improve the customer experience in several important Midwest markets, including Chicago and St. Louis.”

Sprint Nextel Corporation (NYSE:S) will use the additional PCS spectrum to increase its coverage in the Midwest, as the company continues to expand its 4G LTE across the United States.

The transaction is subject to regulatory approvals from the Department of Justice (DOJ) and Federal Communications Commission (FCC). The transaction is expected to close in the middle of 2013.

Last month, Softbank announced its acquisition of a 70 percent stake in Sprint Nextel Corporation (NYSE:S) for $20.1 billion, which enabled the company to boost its balance sheet, and to enhance its network coverage. Sprint also purchased a majority stake in Clearwire Corporation (NASDAQ:CLWR).

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