Despite being known as one of the most reliable mobile networks in the nation, instead of expanding its range, U.S. Cellular is truncating its coverage. In a rather interesting transaction, U.S. Cellular has sold 10 MHz of its wireless spectrum to T-Mobile for $308 million in cash.
The newly acquired wireless spectrum is a part of the Advanced Wireless Service, or AWS, band, which benefits T-Mobile, as it is currently expanding its nationwide 4G LTE coverage at a rapid pace. The acquisition will allow T-Mobile to expand its coverage across 29 markets covering 32 million people in the southeastern United States. Cities in the Mississippi Valley region such as St. Louis; Memphis, Tenn.; Little Rock, Ark.; and New Orleans, will be affected by the change.
U.S. Cellular acquired the regional license for the aforementioned wireless spectrum at an AWS auction in 2008 for $123 million. The frequencies were intended for future expansion. However, the network never deployed coverage into those areas. In addition to earning back what it originally paid for the spectrum, U.S. Cellular makes a 148 percent profit in the acquisition, even while maintaining a small area of the AWS spectrum for itself in Knoxville, Tenn., where it already has coverage established.
Appearing to favor rural and small markets, many expect to see U.S. Cellular continue to sell off parts of its wireless spectrum in the future. In May, the network similarly unloaded a significant portion of its wireless spectrum, covering its hometown of Chicago, as well as in St. Louis and surrounding regions to Sprint for $480 million.
The network’s new CEO, Kenneth Meyers, says the company does in fact plan to “sell off nonstrategic assets.” Former CEO Mary Dillon left the company in June in order to head cosmetics company Ulta Beauty.