Why U.S. Cellular Shares Got Crushed

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of U.S. Cellular (NYSE: USM  ) got crushed today by as much as 10% today after the company agreed  to sell spectrum and customers to Sprint Nextel (NYSE: S  ) .

So what: Sprint is paying $480 million and will acquire  certain chunks of the 1900 MHz spectrum band along with customers in Midwest markets. The 585,000 customers involved in the transaction represent approximately 10% of U.S. Cellular's total customer base.

Now what: The deal indicates that U.S. Cellular is more interested in focusing on rural markets, where it's more profitable in part because it receives roaming revenues from larger carriers. The transaction involves parts of Illinois, Indiana, Michigan, Missouri, and Ohio, including the Chicago and St. Louis markets. In addition to the cash, Sprint is also assuming certain liabilities. Investors seem rattled by the deal and are expressing their pessimism.

Interested in more info on U.S. Cellular? Add it to your watchlist by clicking here.

 
 

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2100601, ~/Articles/ArticleHandler.aspx, 7/23/2014 1:55:57 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement