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T-Mobile will buy the majority of UScellular’s wireless business, the major carrier announced Tuesday, shrinking the number of smaller retailers that cater to more value-conscious customers. Depending on who you ask, this is either great or terrible news.
Washington-based T-Mobile said it will pay roughly $4.4 billion to take over most of UScellular—including its customers and some of its valuable wireless spectrum licenses—and that it aims to close the deal next year following regulatory review. It also includes access to many UScellular tower sites, although UScellular will retain ownership of them.
For T-Mobile, the deal represents a way to break into a different part of the wireless market without curating an entirely new customer base, Chris Stafford, an M&A partner at West Monroe, said.
“It just provides T-Mobile with a greater market share of the broader cell market,” he told Tech Brew. “The other route for them would be to compete in that space on their own and develop their own products and offerings to kind of serve that end of the market. But UScellular has already done that.”
The deal serves up several positives, according to a press release from T-Mobile, including increased wireless coverage for T-Mobile customers, more plan choices for UScellular customers, and expanded home internet options.
For some consumer advocates, however, this consolidation doesn’t translate into an easy win.
Harold Feld, SVP at Public Knowledge, which is urging “strict scrutiny” of the proposed merger, pointed to a recent report suggesting that mobile plan prices have actually risen since T-Mobile acquired Sprint in 2020. Since then, he told Tech Brew, bigger carriers have been gobbling up brands that cater to generally lower-income subscribers.
“This is where we had seen some remaining competition, which has been disappearing,” he said. “We saw this happen with Verizon’s acquisition of Tracfone. We saw this happen with T-Mobile’s acquisition of Mint.”
Ultimately, the UScellular deal points to rising mobile prices across the board, even for value-conscious customers, Feld suggested.
“As we’re seeing this consolidation, these folks are likely to see their prices rise in the same way that the rest of us have,” Feld said.
While Feld said he doesn’t believe the transaction is likely to raise traditional anticompetitive red flags, he noted that the Department of Justice and the Federal Communications Commission have been “much more active” recently. Both regulators could seek to impose conditions on the deal to level the playing field for competitors, such as mandatory data-roaming agreements, he said.