T-Mobile’s deal for US Cellular may raise antitrust issues – (NYSE:USM) analyst

T-Mobile (NASDAQ:TMUS) an agreement to purchase substantially the entire US Cellular network (NYSE:USMThe $4.4 billion wireless operation and portion of the spectrum will likely pose a problem for U.S. antitrust regulators, according to a Benchmark analyst.

“Even beyond T-Mobile exceeding soft spectrum limits In some markets, predictable consumer dissatisfaction with major MNO pricing is certain to trigger election-year antitrust scrutiny from the Biden administration,” benchmark analyst Matthew Harrigan wrote in a note Wednesday.

The deal includes up to $2 billion in cash and debt, which T-Mobile will assume through an exchange offer that will be made to certain U.S. mobile network debt holders before closing. Telephone and Data Systems (TDS), the majority shareholder of US Cellular, said it supports the transaction.

US Cellular shares made up most of their 12% gain on Tuesday, decrease by 8.3% on Wednesday. TDS decreased by 12%.

While the transaction is consistent with T-Mobile’s mergers and acquisitions (TMUS) strategy, it represents only ~2% of the wireless operator’s equity capitalization and is “immaterial” to Benchmark’s investment thesis for TMUS.

“The FCC or Justice Department’s challenge to the proposed U.S. Cellular transaction does not require even the aggressive horizontal M&A strategies proposed by Justice Department’s Jonathan Kanter or the even more extreme ambitions of FTC Chairman Lina M. Khan,” Harrigan, who has a buy rating and a 200 dollars target price on TMUS, he wrote.