Why U.S. Cellular Shares Got Crushed
Nov 7th 2012 4:38PM
Updated Nov 7th 2012 4:42PM
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
So what: Sprint is paying $480 million and will acquire certain chunks of the 1900 MHz spectrum band along with customers in Midwest markets. The 585,000 customers involved in the transaction represent approximately 10% of U.S. Cellular's total customer base.
Now what: The deal indicates that U.S. Cellular is more interested in focusing on rural markets, where it's more profitable in part because it receives roaming revenues from larger carriers. The transaction involves parts of Illinois, Indiana, Michigan, Missouri, and Ohio, including the Chicago and St. Louis markets. In addition to the cash, Sprint is also assuming certain liabilities. Investors seem rattled by the deal and are expressing their pessimism.
Interested in more info on U.S. Cellular? Add it to your watchlist by clicking here.
The article Why U.S. Cellular Shares Got Crushed originally appeared on Fool.com.Evan Niu, CFA, and The Motley Fool have no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.