Mutual Fund manager pushes for sale of U.S. Cellular

Mutual Fund manager pushes for sale of U.S. Cellular
Mutual Fund manager Mario Gabelli has had stock of U.S. Cellular in his portfolios since 2005, and currently owns 4.2 million shares. He also owns 10% of Telephone & Data Systems, a separately listed company that owns 73% of U.S. Cellular shares. The fifth largest U.S. carrier has seen its value drop 18% over the last 12-months, and closed Friday at $37.56 a share. However, a report that Gabelli issued last month suggests that the company is worth as much as $71 per share if its true valuation can be unlocked. The fund manager says that there is a 50% chance of that happening in the medium term.

Trying to get U.S. Cellular management to take actions that would lead to a hike in the stock price, Gabelli took the carrier's Chairman, LeRoy Carlson Jr., to meet with several hedge funds in an effort to convince Carlson to sell the company. The Chairman, a member of the family that founded U.S. Cellular, reportedly is not interested in selling. The regional carrier serves 5 million subscribers in markets like Milwaukee, Oklahoma City and Tulsa.

Back in late 2007, Verizon offered $100 a share for Telephone and Data Systems, the aforementioned company holding that large stake in U.S. Cellular. TDS turned down Big Red and the shares closed Friday at $26.31.

At this point, it doesn't appear that the family controlled U.S. Cellular will be purchased. More likely is the rumored transaction that has T-Mobile and Sprint combining in order to give Verizon and AT&T more competition in the industry. A merger between T-Mobile and Sprint has been rumored every few months with analysts usually expecting the FCC and FTC to reject such a deal. However, the regulatory climate has seemingly improved enough that a combination of the third and fourth largest U.S. carriers might be viewed as a positive for U.S. consumers.

source: NYPost

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6 Comments

1. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

US Cellular sucks. TMO and Sprint are probably never going do merge since Sprint is. CDMA carrier. Switching their towers to GSM would b costly.

2. SleeperOne

Posts: 370; Member since: Feb 25, 2017

If your keyboard is broken... Get the can of air out to blow out the nail clippings, replace the keys, or replace the whole thing man.

4. combatmedic870

Posts: 983; Member since: Sep 02, 2015

Techie, I disagree. CDMA is older 2g/3g tech. I think they would just shut down the CDMA towers(use them for newly acquired 600mhz spectrum) and combine 4g/4glte networks. In many areas it would double the towers. With 4glte mimo coming out, starting with the S8. I could see nothing but good things.

5. Bernoulli

Posts: 4359; Member since: Sep 01, 2012

More impressive is how short and to the point your comment is, keep up the good, short work man.

6. Joshua9007

Posts: 94; Member since: Jun 08, 2012

Actually sprint replaced their base equipment when they did their 'Network Vision' enhancements & they are compatible with any current technology, just plug a new server-blade style card into the base station & configure it at HQ. This was planned on to give sprint the possibility of making money by hosting spectrum of other carriers on their towers without having to lease their own racks and install all their own equipment. I think in theory they thought dish & Comcast would become real competitors in the wireless industry & prefer to partner with sprint to have a lower cost of deployment (as well as being much faster) & sprint would get a profitable cash flow. Now this same technology will at minimum make it easier to integrate a potential merger company's spectrum & technology. T-mobile is largely built itself to a self sustained business, so gone are the days when they could argue that they needed a merger to survive. Sprint still is lacking & the fact that I'm not convinced that the federal government will allow a merger that would essentially cut thousands of jobs, I'm gonna say combination of the 3rd+4th carriers is slim odds. The fact that Massa Son said that he was willing to forgot his majority stake in sprint for the right merger deal, I think would allow him to consider a reverse merger with USCellular allowing their holding company a percentage of the combined entity. This would lessen Son's percentage ownership & give the Carlson family seats on the board. The question is is it better to own party of something large or all of something small... The combination of the 2 would allow for synergies & savings from operations & back office support, and better coverage in the areas where they overlap with some reduction from co-located (or closely located) towers. They could repurpose savings from decommissioned towers to new rural coverage in areas adjacent to existing coverage & as a whole really challenge the other 3 providers once again.

3. Pitrich

Posts: 239; Member since: Apr 13, 2016

Everyone's moving rapidly toward LTE so i don't think it matters anymore

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