AT&T spends $1.018B for prime USCellular spectrum

With UScellular's agreement to sell AT&T $1.018 billion of spectrum today, all three of the major mobile operators "have taken a chunk" of the rural carrier's assets, Recon Analytics lead analyst Roger Entner told Fierce in a phone call this morning.

The agreement includes the sale of 1,250M MHz-Pops of 3.45 GHz and 331M MHz-Pops of 700 MHz B/C block licenses to Ma Bell. This spectrum will likely enable AT&T to layer in better coverage on its existing 5G footprint.

The sale, once approved by regulators, will add additional spectrum to AT&T's existing bandwidth to improve overall coverage.

The 700 MHz band is valuable for distance coverage. The 3.45 GHz band adds capacity that makes it useful for a variety of applications.

"The transaction isn't a surprise," said New Street Research in a note. "It follows closely on the heels of the sale of Cellular licenses to Verizon for $1.0BN."

And before Verizon, T-Mobile made a deal announced in May to acquire most of USCellular's business, including towers and billions of dollars worth of spectrum for about $4.4 billion.

The AT&T deal is likely to see easy regulatory approval, Raymond James analyst Ric Prentiss said in a note.

"With a Republican administration in Washington, we think the regulatory path for these deals is much easier," Prentiss said.

He added, "And we had been expecting [UScellular] to strike a spectrum deal with AT&T, albeit we are surprised it came this soon," Prentiss said.

"The question is what's next?," Entner said.

The AT&T deal still leaves $1.8B of spectrum at USCellular, primarily in C-Band, valued at $1.5B at 2021 auction price. With all the Big Three U.S. carriers having bought portions of the spectrum, the remainder is likely to be scooped up by financial buyers, Pretniss said. That's been a pattern in previoius years, with Columbia Capital, Baupost, and well-known wireless investors including Fritzsche, Grain, Manire, Moise, and Mounger, he said.

So, financial vultures will be the next to pick at the carcass of Chicago-based UScellular to get the last nuggets of value out of that sweet, sweet C-Band spectrum.