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Struggling Carrier Catches T-Mobile’s Attention as the Company Aims to Expand its Reach in Rural Areas

There were some positives for UScellular during Q3. The average revenue per user (ARPU) rose 2% to $51.11 in Q3 from $50.64 in Q2. USCellular CEO Laurent (L.T.) Therivel said that the increase in ARPU was due to the larger number of customers moving to higher flat-rate plans.

In September, T-Mobile’s Sievert was asked if he’d be interested in a rural carrier if it helped speed up T-Mobile’s timetable to reach a 20% share in rural markets by 2025. The executive would only say, “Maybe, but I like our Plan A a lot.” Sievert also pointed out that “the hurdles for M&A would be high” and he could have been describing regulatory issues or monetary ones.

UScellular has a market capitalization of $3.84 billion which sounds like it could be doable for T-Mobile. However, T-Mobile is sitting on $70 billion in long-term debt and had slightly over $5 billion in cash available at the end of the third quarter. Unlike Sprint, which was sitting on a goldmine in 2.5GHz spectrum, it seems that the only attraction for T-Mobile here would be UScellular’s rural coverage.

If T-Mobile does decide to go after UScellular, it might have to bite the bullet and dilute its shares by using its high-priced stock to buy the wireless firm.

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