U.S. Cellular shareholders wants to see the carrier becoming part of the larger rival
By Dusan Belic on Saturday, March 21st, 2009 at 5:43 AM PST In General
Telecom market is in the midst of consolidation virtually all around the world, so why would the United States be any different. If you thought that everything ended with creation of the “New AT&T (NYSE: T),” it seems you were wrong. That said, U.S. Cellular shareholders are pressuring the company to seek a buy-out from one of its larger rivals.
Those not familiar should know that U.S. Cellular is 81% controlled by Telephone & Data Systems (TDS), which large shareholder Southeastern (controls 15% of TDS) is saying that the carrier would be worth more as part of a larger operator.
US Cellular is a CDMA-based operator, making it suitable target for either Verizon (NYSE: VZ) Wireless or Sprint (NYSE: S) Nextel, though other GSM carriers could also be interested. With just under 6.2m customers, U.S. Cellular is the fifth largest operator in the USA and is closely followed by MetroPCS (NYSE: PCS).
[Via: Cellular-News]
USC is in a dilemma. They missed the boat on EVDO, but are too early to build LTE. Now they have to build out EVDO (just to keep customers from switching companies) and then have to turn around and build a whole new LTE network, which will cost way too much. Plus, they have to expand into new areas of the US, but I don’t think they have any plans to. They can’t keep growing their customer base if they don’t add new major metro areas to their licenses. They didn’t get to 6 million customers without adding Chicago and St. Louis. I just don’t think they have the money to do both expand their network into new areas through licenses and network build outs AND build out their EVDO network. Plus, they are the only regional carrier left. Everyone else has gone national in coverage, but USC is still a regional operator. I would look for a buyout offer from either ATT or T-Mobile even though they are GSM. Verizon has no need for USC anymore with their Alltel purchase and 700MHz license. Sprint is broke. ATT would get a huge boost in their coverage areas and T-Mobile would gain 6 million customers to become a serious player as one of the “big 4.” Then either buyer could build out an LTE network. Whatever the case, USC just doesn’t have the capital (for networks and licenses) to compete with these companies that have 10 times the customer base that US Cellular does.