TMUS - Telephone and Data Systems: T-Mobile's Interest In U.S. Cellular Is Positive
2024-02-05 17:01:03 ET
Summary
- United States Cellular's exploring of strategic alternatives sent parent company Telephone and Data Systems shares soaring by 65%, and this thesis makes the case for further upside.
- Asset sales are justified by TDS's wireless business unit facing high investment costs and fierce competition in the telecommunications industry.
- On the other hand, the company will shrink in size, but the sales will release cash which can be invested in the fiber business.
- The move by TDS to dispose of U.S. Cellular assets is aligned with the ongoing consolidation in the telecom industry.
- However, expect some volatility as a deal may take time to materialize due to other related assets having to be disposed of as well.
On August 4, news that wireless carrier United States Cellular Corporation ( USM ) was exploring strategic alternatives sent parent company Telephone and Data Systems, Inc. ( TDS ) shares skyrocketing, by more than 65% as shown below....
Telephone and Data Systems: T-Mobile's Interest In U.S. Cellular Is Positive