Sprint (s s), now poised to become majority owned by Japan’s Softbank, is adding to its spectrum resources by buying up $480 million worth of spectrum and customers from U.S. Cellular (s usm). The purchase, which also includes the assumption of “certain liabilities” will help Sprint improve its coverage in the midwest and boost its 4G LTE roll out.
Sprint will acquire 20 MHz of spectrum in the 1900 MHz band in Chicago, South Bend, Ind. and Champaign, Ill. and 10 MHz of spectrum in St. Louis. The third-place carrier is also buying up 585,000 U.S. Cellular customers in parts of Illinois, Indiana, Michigan, Missouri and Ohio.
U.S. Cellular is giving up about 10 percent of its subscriber base. It said it would continue to operate outside of the markets it is handing over to Sprint. The move should help it focus its operations on other markets, where it said it has a stronger position. It is planning on offering its own LTE 4G service to most of its customers this year.
The deal is expected to close by mid-2013, when the Sprint-Softbank deal is also expected to close. When it does, the Sprint and U.S. Cellular will start to transition U.S. Cellular users over to Sprint. U.S. Cellular said it will retain direct and indirect ownership in 560 towers and spectrum in the affected markets. After the deal closes, U.S. Cellular will also start moving out most of the 1,400 employees it has in the Chicago area, where the company is based.
Sprint continues to show that it wants to compete with giants Verizon (s vz) and AT&T (s t) and a bulked up T-Mobile, which is merging with MetroPCS. The new deal will give Sprint a small boost in subscribers but it also shows just how important spectrum is to carriers, who can always use more spectrum as they roll out 4G service.