T-Mobile’s purchase of US Cellular’s wireless ops provides rural growth: Wells Fargo

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“From TMUS’s perspective, this is an opportunistic move to accelerate its smaller market/rural strategy to grow market share from ~17.5% vs. its 35-40% share in Tier 1 markets and tuck-in additional spectrum assets that largely overlap with existing holdings in the low and mid-band,” said Wells Fargo analysts Eric Luebchow and Caleb Stein, in a note.

The deal, which is expected to close by the middle of next year, will give T-Mobile about 5M of U.S. Cellular’s subscribers and 30% of its spectrum assets.

Wells Fargo expects Verizon Communications (VZ) the most likely candidate to acquire U.S. Cellular’s remaining spectrum assets due to overlap in the low-band and mid-band.

U.S. Cellular jumped 5% by noon trading on Tuesday, while T-Mobile inched up about 1%.



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