Sprint is flexing its new financial muscle from Japan-based Softbank's recent funding in the company by making an acquisition bid for U.S. Cellular's Midwestern U.S. spectrum and customers.
Sprint on Wednesday said it has a definitive agreement with U.S. Cellular to buy its PCS spectrum and customers in parts of Illinois, Indiana, Michigan, Missouri and Ohio, including Chicago and St. Louis, which Sprint is using as a way to supplement its coverage in those areas while it moves toward a nation-wide deployment of 4G LTE.
Sprint will pay U.S. Cellular $480 million and assume certain liabilities for the spectrum and about 585,000 customers in the deal, which is expected to close in mid-2013, subject to regulatory approvals by the Department of Justice and the Federal Communications Commission.
The Sprint bid to acquire spectrum and customers from U.S. Cellular comes less than a month after Softbank agreed to acquire a major stake in Sprint.
Softbank, Japan's third-largest mobile carrier, said in October it plans to acquire a major stake in U.S. carrier Sprint Nextel in a deal that will both extend Softbank's reach into the U.S. mobile market and give Sprint a competitive boost against rivals AT&T and Verizon.
That deal, through which Softbank will pay $20.1 billion for a 70 percent stake in Sprint, is also expected to close in mid-2013. Softbank said it plans to pay $12.1 billion to Sprint shareholders for its stake in the company, coupled with an additional $8 billion in new capital intended to strengthen Sprint's balance sheet.
Sprint is currently the third largest carrier in the U.S. after AT&T and Verizon.
Bloomberg on Wednesday reported that Sprint last month had already received $3.1 billion in cash from Softbank from the proposed $20.1 billion investment in the company.
Sprint CEO Dan Hesse said in a written statement that the purchase of spectrum and customers from U.S. Cellular will enable Sprint to strengthen its business and become a more robust competitor.
"Acquiring this spectrum will significantly increase Sprint's network capacity and improve the customer experience in several important Midwest markets including Chicago and St. Louis. We welcome the new customers in these markets and look forward to providing them with Sprint's unique combination of unlimited plans, an iconic device portfolio and unmatched customer service," Hesse said in the statement.
Sprint spokespeople did not respond to requests for further information.
Kristin Bent contributed to this article.
PUBLISHED NOV. 7, 2012