Verizon will buy U.S. Cellular, here are the signs:
1. Stock price performance good during last quarter despite billing problems and typical sub losses
2. USM would not have put up the $1.5 billion over three years for Apple I-phone for any other reason than aligning with acquiror. This was a flip-flop for strategic reasons.
3. USM shared data plans now mimic Verizon's plans. Yes they mimic ATT also, but I think the compatability issues are greater with ATT.
4. If I am not mistaken, USM is building LTE in the 800 band and not the 700 band. All this after pressing the interoperability problem in the 700 band forever, finally with a sucessful FCC order which ATT initially did not support but ultimately did. In any event, I don't think Verizon is using 700 for LTE and USM says its license partner Aquinas (I think owns the 700 stuff but not 100% positive) is "still making long-term plans".
5. USM seems to have a lot of cooperation with Verizon, but not ATT.
6. FCC would not stop any deal for USM by Verizon, ATT, or Sprint. Its not akin to the TMobile ATT buyout attempt. USM is bleeding subs and can't stay independent much longer. Hello Verizon.
7. TDS is doing all sorts of things with its balance sheet and funds: acquisitions on wireline/cable side, deconsolidating non-oprerating markets, all of which are highly profitable and valuable. I think it is all positioning itself for a post-USM world.
8. The Sprint Chicago and St. Louis deals seem to be ahead of schedule...they had two years to migrate USM customers. After 1 year I think 70% are off the network. When that's over, USM can either sell the towers or use as bait for Verizon. The towers are worth at least $100 million.
2014 is the year USM is sold to Verizon. ATT or Sprint are possible too, but I think the deal with Sprint was just to get rid of things Verizon didn't need. They kept the towers for a reason. I suspect Sprint would have happily taken the towers, but they didn't.
I'm not as sure on Verizon being the sure deal, but am in agreement something will happen sooner rather than later. There is absolutely no other reason for the stock price to be behaving the way it has lately. Also, I don't think Sprint or AT&T own their own towers anymore. My memory is they sold them about a decade ago.
The point on towers is that they are valuable and there are ways to monetize...most carriers seem to be going the sell/leaseback route. I think ATT just sold a bunch to Crown Castle. Historically they were considered a "strategic" asset and even though each carrier knew it could monetize it, it was more important to control it - basically make sure whoever you lease extra space to is a frienemy rather than an enemy. At this stage they are no longer strategic assets in the major metropolitan areas because in general there are plenty of locations/towers and the game has shifted away from trying to impede your enemy in getting a network built and toward efficiencies. There may also be issues with accounting unique to each carrier, but the bottom line is that USM has 5 or 6 thousand towers which can be monetized to the tune of $1 billion. And even if an eventual buyer has already monetized their own tower assets, it can still be advantageous for them to buy the towers and sell them to their preferred tower consolidator - Crown or American Tower, etc. Different carriers might have better or worse relationships and be able to get a better or worse price for the towers.
In any event, customers, towers, and bandwidth are all strategic assets, and bandwidth in particular has become more valuable. I think price per megahertz-pop is up 30 - 50 % in the last year alone. Customers are important and any of the majors would love to add 5 million customers, but the hidden value now is in bandwidth and towers - both of these things are at book values which don't represent fair value, which is higher.
USM is probably worth $7.5 billion to a buyer. All of the recent sudden moves - sell Chicago and St. Louis, deconsolidate NY markets, monetize the Chicago St. Louis towers, etc. are signs of preparing for the inevitable.
Seems pretty clear to me that USM has a fairly friendly relationship with Verizon - Sprint and ATT, not so much, but Sprint is probably in the game too.