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United States Cellular Corp USM

Morningstar Rating
$57.81 +0.29 (0.50%)
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Company Report

Sale of US Cellular’s Wireless Business Is in Shareholders’ Best Interests

US Cellular has agreed to sell its wireless operations and 30% of its spectrum licenses to T-Mobile. Assuming the deal goes through, this will leave US Cellular with the remaining spectrum licenses, its tower business, and equity investments in multiple other wireless businesses, most notably Verizon’s Los Angeles operations. We anticipate US Cellular will soon agree to sell most, if not all, of its remaining assets, with a deal contingent on completion of the sale to T-Mobile. Without wireless operations, the spectrum licenses will do US Cellular little good for its own use, but they should have significant value for other wireless operators. We doubt US Cellular will choose to continue operating exclusively as a very small tower provider, so we expect the firm to sell that business as well. We think these moves are in the best interests of shareholders, but these transactions will require regulatory approval.

Price vs Fair Value

USM is trading at a 692% premium.
Price
$57.81
Fair Value
$66.00
Uncertainty
Very High
1-Star Price
$43.00
5-Star Price
$28.00
Economic Moat
Sbmkm
Capital Allocation
Tbfm

Bulls Say, Bears Say

Bulls

Offering fixed wireless can help mitigate a shrinking mobile phone customer base while also deepening US Cellular’s ties to its customers.

Bears

US Cellular’s deal to sell its wireless operations to T-Mobile may not get regulatory approval, considering US regulators’ tougher recent stance on mergers.

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News

Trading Information

Previous Close Price
$57.52
Day Range
$57.5059.42
52-Week Range
$15.6460.14
Bid/Ask
$31.00 / $59.89
Market Cap
$4.97 Bil
Volume/Avg
168,629 / 340,481

Key Statistics

Price/Earnings (Normalized)
160.21
Price/Sales
1.31
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield

Company Profile

us Cellular is a regional wireless carrier that serves about 4.5 million customers spread across four major geographic clusters: the Midwest, mid-Atlantic, New England, and the Pacific Northwest. These service territories encompass a total population of about 32 million people. The vast majority of the markets the firm serves are rural or second/third-tier cities, with only the greater Milwaukee and Oklahoma City regions boasting populations greater than 1 million. us Cellular also owns a 5.5% stake in Verizon Wireless’ Los Angeles operations and, unlike its wireless carrier peers, owns most of its own towers. The firm has agreed to sell its wireless operations and 30% of its wireless spectrum licenses to T-Mobile, a transaction that it expects to close in mid-2025.
Sector
Communication Services
Industry
Telecom Services
Stock Style Box
Small Core
Total Number of Employees
4,300

Competitors

Valuation

Metric
USM
TMUS
VZ
Price/Earnings (Normalized)
160.2122.178.89
Price/Book Value
1.053.471.86
Price/Sales
1.312.781.30
Price/Cash Flow
5.528.284.56
Price/Earnings
USM
TMUS
VZ

Financial Strength

Metric
USM
TMUS
VZ
Quick Ratio
1.330.730.52
Current Ratio
1.670.940.71
Interest Coverage
1.664.423.72
Quick Ratio
USM
TMUS
VZ

Profitability

Metric
USM
TMUS
VZ
Return on Assets (Normalized)
1.74%4.83%4.66%
Return on Equity (Normalized)
4.08%15.54%18.99%
Return on Invested Capital (Normalized)
3.82%7.04%7.89%
Return on Assets
USM
TMUS
VZ
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