Slightly more than one month has passed since T-Mobile closed on its purchase of UScellular stores and 30% of its spectrum on August 1st. Those airwaves include low-band spectrum in the 600 MHz and 700 MHz range. T-Mobile will also get to add to its most important spectrum holdings, and that is the 2.5 GHz mid-band spectrum used by the carrier for its 5G Ultra Capacity service. The transaction was valued at $4.3 billion, with T-Mobile paying $2.6 billion in cash and assuming $1.7 billion of UScellular debt.
T-Mobile's synergies from its deal with UScellular will be more beneficial to the carrier than first thought
When a company acquires another firm, or merges with another, the financial benefits that the acquiring company expects to gain are called synergy. T-Mobile today updated what impact the UScellular deal will have on the firm and is increasing and moving up its synergy targets. T-Mobile COO Srini Gopalan said today, "As a part of the Un-carrier’s unparalleled track record of exceeding our own ambitious goals, we’re pleased to announce today that we’re both increasing and accelerating our synergy target with UScellular. We’re bringing the same winning formula of our unique value proposition, including our industry-leading network, to UScellular customers, while further augmenting our network for our customers."
UScellular is giving up many of its retail locations to T-Mobile. | Image credit-UScellular
In the T-Mobile press release, the carrier pointed out the following synergy updates:
T-Mobile hiked its estimates and now expects the UScellular transaction to deliver approximately $1.2 billion in annual cost savings, thanks to synergies that are part of the deal. This is a 20% increase from the original $1.0 billion run-rate synergy announced by T-Mobile.
Operating expense (opex) synergies, the savings from the cost of running the business day to day, are now estimated to be $950 million. Capital expenditure (capex) synergies, the savings achieved from one-time or long-term investments in physical assets, is now estimated to be $250 million. These savings are expected to take place once the UScellular assets are integrated into T-Mobile.
Will the UScellular deal prove to be a good one for T-Mobile
Yes. It sure sounds like it is already.
62.5%
No. Those results just massage numbers.
0%
Way too early to say.
37.5%
The integration is now expected to be achieved in approximately two years, an acceleration from the three-to-four-year period originally expected. T-Mobile still plans to reinvest a portion of the cost savings it achieves to enhance consumer choice, quality, and competition in the wireless industry. T-Mobile will need to spend $2.6 billion in order to obtain the synergies mentioned, a metric known as the "Costs to achieve."
The company also expects the acquisition to impact its financials in the following ways:
Service revenues of approximately $400 million
Core Adjusted EBITDA (1) of approximately $125 million
Approximately $100 million in costs to achieve as the company begins an accelerated integration process, which are excluded from Core Adjusted EBITDA, and approximately $175 million in depreciation and amortization expenses.
Acquisition of the lower Postpaid ARPA UScellular base, together with postpaid accounts acquired from the Metronet joint venture also with lower Postpaid ARPA, will impact consolidated T-Mobile Postpaid ARPA by approximately $1.50 in Q3. These acquired customers represent an exciting opportunity to apply the company’s proven ARPA expansion playbook as part of integration.
Excluding UScellular and Metronet, T-Mobile’s underlying business continues to see strong Postpaid ARPA growth, with ongoing expectations for full year 2025 versus 2024 growth of at least 3.5%.
T-Mobile to be impacted by UScellular's higher churn rate
T-Mobile's financials are expected to be negatively impacted by the higher churn rates that UScellular reports. The churn rate is the percentage of a carrier's subscribers who leave to move to a rival company. Strong T-Mobile postpaid net additions should offset the higher churn rate. The company is also expected to generate an additional $120 million in amortization, integration, depreciation, and other expenses.
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T-Mobile's shares are up 26.8% over the last year and 14.9% since the start of 2025. T-Mobile closed on Thursday at $252.12, giving the company a market capitalization (share price multiplied by the number of shares outstanding) of $283.7 billion.
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