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U.S. Cellular Gets Millimeter Wave Spectrum, Eyes 5G Network

Zacks Equity Research

Bidding for high frequency spectrum in the recently hosted FCC Millimeter Wave Spectrum Auctions, United States Cellular Corporation USM successfully acquired licenses that cover 98% of its overall customers for $256 million or 1.7 cents per MHz passing one person (pop).

U.S. Cellular aims to address the growing demand for data services as well as create new opportunities for innovative services that require high speed, reliability and low latency. In the 28 GHz Auction, the wireless telecommunications service provider reportedly paid $129.4 million or 2.1 cents per MHz pop, securing 408 licenses covering 60% of its subscriber base, with at least 425 MHz of millimeter wave spectrum.

In the 24 GHz Auction, the company spent $126.6 million or 1.5 cents per MHz pop, acquiring 282 licenses covering 93% of its customers. Put together, the auctions enabled U.S. Cellular to acquire at least 300 MHz of spectrum in markets that accounts for 97% of its total subscriber base. As a result, the company can now cover most of its subscribers, which enables it to provide the cutting-edge capabilities of 5G technology.

Markedly, U.S. Cellular’s fifth-generation network strategy involves the use of a variety of spectrum bands over time. The company’s initial 5G deployment will likely be on its 600 MHz spectrum as this will provide enhanced broadband speed and capacity across its footprint.

The company is progressing well in its multi-year network modernization initiative by building its network for the future of connectivity. This will give competitive advantage, while matching increasing expectations of customers.

Further, U.S. Cellular has taken major steps to accelerate subscriber additions and improve churn performance. The company intends to offer the best wireless experience to customers by providing superior quality network and national coverage.

Telephone and Data Systems, Inc. TDS owned 82% stakes in U.S. Cellular as of Mar 31, 2019. U.S. Cellular continues to strengthen its customer base, witness greater adoption of its unlimited total plans and tap new revenue sources while focusing on cost management.

Driven by diligent execution of key business strategies, the stock has rallied 38.3% compared with the industry’s rise of 10.5% in the past year.



U.S. Cellular currently sports a Zacks Rank #1 (Strong Buy). A couple of other top-ranked stocks in the industry include T-Mobile US, Inc. TMUS and Verizon Communications Inc. VZ, both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

T-Mobile has long-term earnings growth expectation of 13%.

Verizon has long-term earnings growth expectation of 4.3%.

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Verizon Communications Inc. (VZ) : Free Stock Analysis Report
 
Telephone and Data Systems, Inc. (TDS) : Free Stock Analysis Report
 
T-Mobile US, Inc. (TMUS) : Free Stock Analysis Report
 
United States Cellular Corporation (USM) : Free Stock Analysis Report
 
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