United States Cellular Corporation today announced strategic actions designed to increase focus on markets where it has strong positions and streamline operations to increase overall efficiency and effectiveness.
U.S. Cellular has reached a definitive agreement to sell its Chicago, St. Louis, central Illinois and three other Midwest markets (the “Transaction Markets”) to subsidiaries of Sprint Nextel Corporation for $480 million. The sale includes PCS spectrum and approximately 585,000 customers, or about 10 percent of U.S. Cellular’s total customer base.
The company also announced that it will transition its Bolingbrook Customer Care Center operations to an existing vendor partner, effective Jan. 1, 2013.
“In the dynamic wireless marketplace, we have a clear strategy to accelerate profitable growth and increase return on investment over the long term, and we are taking decisive steps to achieve it,” said Mary N. Dillon, U.S. Cellular president and CEO. “Exiting these markets enables us to play to our strengths in markets where we have higher penetration and where we can effectively sharpen our proven strategy to differentiate the U.S. Cellular customer experience from other wireless carriers. Going forward, we will continue to serve more than 5.2 million customers with the unparalleled experience they expect from U.S. Cellular.”
Following the market divestiture, U.S. Cellular will continue to have more than 1,400 associates in the Chicago area at its Chicago headquarters and additional facilities in the surrounding suburbs. During the transition period, the company may keep open certain retail locations in the Transaction Markets and will provide certain transition services to Sprint. Over time, both company and agent-owned stores will be closed. Upon completion of the transition services period, the majority of the company’s retail, engineering and business support associates in these markets will not be retained.
“Our customer-focused business model is possible because of the dedication of our passionate associates,” Dillon said. “Given how these decisions affect associates, they were not taken lightly. We value and appreciate their contributions and we will provide comprehensive support for them as they make their career transitions. We will also continue to deliver outstanding service and support to our customers in these markets during the transition period.”
As part of this transaction, the parties will enter into a number of related agreements, including Transition Services Agreements for network operations and billing and customer service. U.S. Cellular will retain its direct and indirect ownership interests in approximately 560 towers and other spectrum in the Transaction Markets.
For the nine months ended Sept. 30, 2012, the Transaction Markets generated service revenues of approximately $340 million (11 percent of reported consolidated service revenues) and, after all direct and indirect costs, incurred an operating loss.
The transaction is subject to Federal Communications Commission approval, compliance with the Hart-Scott-Rodino Act and other conditions. Subject to the satisfaction or (if permitted) waiver of all conditions, the transaction is expected to close by mid-2013.
In connection with the Bolingbrook Customer Care Center transaction, the majority of the company’s associates will become employees of the vendor partner, which will continue to provide services to U.S. Cellular through a transition period. Through the Bolingbrook and other Customer Care Center operations, the company will continue to deliver award-winning customer service. After transition and exit costs, the transaction is expected to reduce facilities expenses by more than $3 million annually beginning in 2014.
Upon completion of the transaction, U.S. Cellular will continue to provide its customers with a high-speed nationwide network that has the highest call quality of any national carrier. U.S. Cellular, in partnership with King Street Wireless in certain markets, will offer 4G LTE service to 58 percent of its customers by the end of the year. For more information about the 4G LTE experience, visit uscellular.com/4G.
Source: U.S. Cellular
[Thanks to MacDailyNews Reader “Paul” for the heads up.]