FCC approves T-Mobile-USCellular deal paving the way for it to close soon
The FCC approves T-Mobile's $4.4 billion deal with UScellular, acquiring customers, stores, and spectrum.
When a carrier like T-Mobile proposes an acquisition of another wireless provider, the transaction needs to be approved by both the FCC and the Justice Department (DOJ). Last Friday, we told you that the DOJ had signed off on T-Mobile's $4.4 billion acquisition of assets from UScellular. Today, the FCC followed suit by approving the deal after T-Mobile agreed to eliminate anything to do with its diversity, equity, and inclusion (DEI) programs.
Republican FCC Chairman Brendan Carr has made politics part of the FCC's decision-making process by telling companies that if they want the FCC to approve a deal, companies need to get rid of their DEI programs. It brings back memories of the first Trump term when his hand-picked FCC Chairman Ajit Pai ended up engulfed in controversy over his decision to do away with Net Neutrality.
The FCC approved the UScellular-T-Mobile transaction without a vote from the full commission. The FCC is currently made up of three commissioners (two Republicans, one Democrat). The regulatory agency is typically has five commissioners with no more than three coming from one party. Not surprisingly, the version of the FCC led by Carr leans more in favor of the carriers and is less likely to rule in favor of consumers. For example, while approving T-Mobile's deal with UScellular, it refused to rule on matters important to consumers, such as customer transitions, handset unlocking, and roaming.
The Rural Wireless Association (RWA) said it is astonished that the FCC "rubber stamped" the deal, and it is concerned that T-Mobile won't honor UScellular's existing roaming agreements with rural carriers. This could possibly force rural providers that rely on these deals to leave the industry.
Under the terms of the deal, T-Mobile will pay $2.4 billion in cash and assume $2 billion of UScellular debt to acquire close to 4 million customers belonging to the nation's fifth-largest carrier. T-Mobile also picks up UScellular's retail stores, and its spectrum in the 600 MHz, 700 MHz A Block, PCS, AWS, 2.5 GHz, and 24 GHz (mmWave) frequencies. The 4,400 towers owned by UScellular will stay with the company as it goes into the business of leasing towers.
The FCC also approved another transaction involving T-Mobile. The transfer of five Metronet subsidiaries to T-Mobile has been approved by the FCC. This allows the carrier to acquire fiber provider Metronet as part of a deal with LBO firm Kohlberg Kravis Roberts (KKR).
T-Mobile and UScellular now must arrange to close on the transaction.
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