Shareholders Pushing for Sale of US Cellular to Larger Rival

Further consolidation in the USA's telecoms market could be imminent as shareholders are reported to be pressuring U.S. Cellular to seek a buy-out from one of its larger rivals. The company is 81% controlled by Telephone & Data Systems (TDS), which is itself facing pressure from several large shareholders to put itself up for sale.

US Cellular is the fifth largest operator in the USA, with just under 6.2m customers - although a recent analysis by the Mobile World predicted that it could well be surpassed by MetroPCS during 2009.

A Reuters news report, citing people close to the matter said that Southeastern, which controls about a 15 percent stake in TDS, wants the company to put itself up for sale, saying that it would be worth more as part of a larger operator.

"TDS is one of the last regional carriers standing," said Blair Levin, a telecoms policy analyst at Stifel Nicolaus. The souring economy, coupled with slowing subscriber growth, will push the industry to consolidate even more, he added.

US Cellular is a CDMA operator, making it a suitable target for either Verizon Wireless or Sprint Nextel, although an acquisition by Verizon could raise anti-trust concerns due to its existing market share. Although unlikely, a buyout by one of the GSM operators should not be discounted as all the networks are in the midst of network upgrades over the next few years, so migrating the CDMA base to a newer LTE or WCDMA overlay would not be particularly difficult.

Potential Market Share if Brought by Top-4 Operator 266.8

Based on customer base at end Q3 '08, figures from The Mobile World

On the web: Reuters - Mobile World

Posted to the site on 15th March 2009