U.S. Cellular Plans LTE Launch in New Markets

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United States Cellular Corporation (USM) in collaboration with King Street Wireless announced that it will expand its LTE network by additional 1,200 4G LTE cell sites in 2014 covering more 13 states. By the end of 2014, the company expects to cover over 93% of its customer base with 4G. We believe the expansion plans will increase market penetration for the company in LTE space and support improvement in churn rate with enhanced network service.

U.S. Cellular, wireless subsidiary of Telephone & Data Systems Inc. (TDS) recently expanded its coverage to Kansas, Missouri, Nebraska, Oklahoma and North Carolina and expects to bring the service in new markets like Oklahoma City and Emporia, KS.

To support LTE expansions, U.S. Cellular completed a spectrum swap with Verizon Communications (VZ) in Sep 2011 that provided the former with eighteen 700 MHz spectrum licenses covering eight states. According to the company, synergies arising from this deal are expected around $264 million through 2014 with a majority of the gain realised in 2013.

In Nov 2012, U.S. Cellular struck a $480 million deal with Sprint Nextel Corp. (S) under which it sold personal communications service (:PCS) spectrum in certain areas and approximately 585,000 customers. Completed in May 2013, the transaction entailed U.S. Cellular to continue operations in these areas and build customers for two years after the agreement closure.

Sprint will reimburse up to $200 million in network fee commissioning costs incurred on site lease rentals and backhaul payments along with certain network decommissioning cost. In Oct 2013, U.S. Cellular sold its Mississippi Valley non-operating market spectrum license to a wholly owned subsidiary of T-Mobile U.S. Inc. (TMUS) for $308.0 million.

U.S. Cellular currently has a Zacks Rank #4 (Sell).

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