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Summary:

Rather than expanding further into the major metro markets, U.S. Cellular is retreating from them. It is selling a valuable chunk of 4G airwaves to T-Mobile, covering some big cities in the central U.S.

U.S. Cellular seems to be entrenching in its core rural and small markets, leaving the big cities to the big carriers. After selling its PCS to licenses in Chicago and St. Louis to Sprint, U.S. Cellular revealed on Friday that it has struck a similar deal with T-Mobile, selling a 10 MHz chunk of frequencies covering major cities in the Mississippi Valley for $308 million.

The spectrum is in the Advanced Wireless Service (AWS) band, which, as T-Mobile CEO John Legere pointed out, “is gold” in today’s marketplace. Three of the four nationwide carriers have plans for LTE in AWS band, and there’s a limited amount of spectrum to go around. Ten megahertz may not sound like a lot but it will allow T-Mobile to add valuable capacity to its LTE systems in some important markets like St. Louis, Kansas City, Nashville, and New Orleans.

U.S. Cellular originally bought the regional license and several smaller market-specific licenses at the AWS auction in 2008, paying a total of $123 million. It is even carving out a chunk out of the AWS license that it’s selling T-Mobile around Knoxville, Tenn., where it currently offers service. Even though it’s keeping a many of those airwaves, U.S. Cellular has made back what it spent at auction plus a 148 percent profit.

U.S. Cellular never deployed anything in those frequencies — they were supposed to be used for future expansion. But expansion doesn’t seem to be part of U.S. Cellular’s plans any more. With the Sprint deal, U.S. Cellular actually abandoned Chicago, a city it had a major presence in. Chicago is the company’s headquarters, and it even holds naming rights to U.S. Cellular Field (commonly know as “The Cell”), home of the Chicago White Sox.

U.S. Cellular recently lost its CEO Mary Dillon, who left to take over cosmetics company Ulta Beauty. Her replacement Kenneth Meyers said that the company is looking to sell off non-strategic assets, so we might see several more of these spectrum sales in the future.

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  1. Too bad this post isn’t completely factual. The reason why US Cellular left St. Louis and Chicago weren’t because they weren’t interested in expanding. Verizon and AT&T bought all the available spectrum in those markets and USCC was unable to reach a deal with Verizon regarding spectrum sales due to the federal government blocking the sale unless Verizon sold it “at-cost” with no profit. USCC is focusing on rural areas often ignored by the major companies and the spectrum that was sold in Mississippi, according to US Cellular’s long-arm “Team US Cellular”, wasn’t even being utilized and there was no customer impact unlike the spectrum sale with Sprint.

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