(By Balachander) Sprint Nextel Corp. (NYSE: S) has agreed to acquire spectrum and customers in certain Midwest markets from U.S. Cellular (NYSE: USM) for $480 million in cash.
In premarket trading on Wednesday, Sprint shares fell 1.75 percent and U.S. Cellular shares were inactive.
Overland Park, Kansas-based Sprint said the deal will significantly increase its network capacity and supplement its coverage in parts of Illinois, Indiana, Michigan, Missouri and Ohio including the Chicago and St. Louis markets.
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Under the terms of the deal, Sprint will purchase 20 MHz of PCS spectrum in the 1900 MHz band in various Midwest markets including Chicago, South Bend, Ind. and Champaign, Ill. and 10 MHz of PCS spectrum in the St. Louis market.
The deal also involves roughly 585,000 U.S. Cellular customers, or around 10 percent of its total customer base.
U.S. Cellular said the sale of spectrum is designed to increase focus on markets where it has strong positions and streamline operations to increase overall efficiency and effectiveness.
"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," said U.S. Cellular CEO Mary Dillon.
Chicago-based U.S. Cellular employed roughly 8,400 people as of Sept. 30, 2012. At the end of the third quarter of 2012, Telephone and Data Systems Inc. owned 84 percent of U.S. Cellular.
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U.S Cellular also announced that it will transition its Bolingbrook Customer Care Center operations to an existing vendor partner, effective Jan. 1, 2013.
The deal is expected to be completed in mid-2013.