T-Mobile is on the move—in terms of mergers and acquisitions.
On Tuesday, the mobile carrier announced that it will acquire the wireless operations of U.S. Cellular for $4.4 billion in an effort to beef up service in rural areas. All told, T-Mobile will onboard roughly four million new customers as a result of the acquisition, which should close sometime next year. U.S. Cellular will retain around 70% of its wireless spectrum licenses and cell towers.
Leadership from both companies say the acquisition is a result of an increasingly consolidated mobile market and should help T-Mobile’s coverage outside of urban and suburban areas around the country.
“As customers from both companies will get more coverage and more capacity from our combined footprint, our competitors will be forced to keep up—and even more consumers will benefit,” said Mike Sievert, CEO of T-Mobile, in a statement.
“In the face of rising competition and increasing capital intensity required to keep pace with the latest technologies, and following our careful and deliberate strategic review, we are confident that continuing to deliver on our mission requires a level of scale and investment that is best achieved by integrating our wireless operations with those of T-Mobile,” said LeRoy T. Carlson, Jr., chair of the board of directors of U.S. Cellular, in a statement.
Antitrust scrutiny is likely
Interestingly, T-Mobile’s acquisitions come at a time when federal regulators—the Federal Trade Commission (FTC), in particular—have become increasingly skeptical of mergers, and their potential effects on consumers.
Six months ago, the FTC and the Department of Justice (DOJ) released revised merger guidelines, and last year, the FTC challenged 24 mergers while the DOJ challenged 26—the highest total since the federal government started premerger antitrust reviews nearly 50 years ago, according to Bloomberg.
T-Mobile’s move comes about a year after the announcement of its acquisition of Ka’ena Corporation, the parent company of Mint Mobile and Ultra Mobile, for $1.35 billion. That deal was approved roughly a month ago by the Federal Communications Commission (FCC). T-Mobile also merged with Sprint in 2020.
The UScellular acquisition will likely be subject to review by regulators, but it’s unclear, at this point, whether there are concerns that it could kneecap the deal.