USM Q2 Deep Dive: T-Mobile Sale Reshapes Strategy, Fiber and Towers in Focus

August 12, 2025 at 01:30 AM EDT

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Wireless telecommunications provider U.S. Cellular (NYSE: USM) announced better-than-expected revenue in Q2 CY2025, but sales fell by 1.2% year on year to $916 million. Its GAAP profit of $0.35 per share was 5.4% above analysts’ consensus estimates.

Is now the time to buy USM? Find out in our full research report (it’s free).

U.S. Cellular (USM) Q2 CY2025 Highlights:

Revenue: $916 million vs analyst estimates of $902.6 million (1.2% year-on-year decline, 1.5% beat)
EPS (GAAP): $0.35 vs analyst estimates of $0.33 (5.4% beat)
Adjusted EBITDA: $254 million vs analyst estimates of $241.8 million (27.7% margin, 5% beat)
Operating Margin: 3.8%, in line with the same quarter last year
Market Capitalization: $6.65 billion

StockStory’s Take

U.S. Cellular’s second quarter results were greeted positively by the market as the company delivered revenue and profit ahead of Wall Street’s expectations, despite a modest year-on-year sales decline. Leadership attributed the outperformance to disciplined execution during a period of significant transformation, with CEO Walter Carlson highlighting the successful close of the T-Mobile transaction and the resulting shift toward a focused fiber and tower infrastructure strategy. CFO Vicki Villacrez emphasized ongoing capital allocation efforts to strengthen the company’s financial position and fund growth initiatives in core operating segments.

Looking forward, U.S. Cellular’s outlook is shaped by its transition away from wireless operations to concentrate on fiber broadband expansion and tower infrastructure. Management’s priorities include closing pending spectrum sales to major carriers, accelerating fiber address growth, and optimizing tower assets under new master license agreements. As Interim CEO Doug Chambers noted, “Implementation of the new T-Mobile master license agreement and continued spectrum monetization will drive our business model going forward,” while new TDS Telecom CEO Ken Dixon is expected to further develop fiber investment opportunities and penetration strategies.

Key Insights from Management’s Remarks

Management emphasized the pivotal shift following the wireless business sale and outlined actions to drive value in fiber and tower operations.

T-Mobile transaction completed: The $4.3 billion sale of the wireless business and certain spectrum assets to T-Mobile was highlighted as a crucial milestone, unlocking shareholder value and enabling a greater focus on fiber and tower growth.
Capital allocation and debt reduction: CFO Vicki Villacrez detailed a plan to use proceeds to redeem high-cost debt, lowering annual interest expenses by $80 million and targeting a more flexible balance sheet for future investments.
Tower business repositioning: With 4,400 towers, the company is now positioned as the fifth largest independent U.S. tower operator. Management noted the new master license agreement (MLA) with T-Mobile, which includes long-term commitments for colocations and lease extensions, is expected to drive steady recurring revenue.
Fiber expansion momentum: TDS Telecom continued to expand its fiber footprint, delivering 27,000 new fiber service addresses in the quarter and targeting 150,000 for the year, with a particular focus on rural areas through the E-ACAM program.
Divestitures and portfolio optimization: The company divested select copper-based markets and advanced the sale of additional spectrum to AT&T and Verizon, reinforcing a strategy to exit legacy businesses and concentrate resources on scalable, higher-growth infrastructure assets.

Drivers of Future Performance

Management’s outlook centers on executing fiber buildout, closing pending spectrum transactions, and leveraging new tower agreements to drive stable long-term growth.

Fiber footprint acceleration: Leadership sees a window of opportunity to aggressively expand fiber service addresses, especially in underserved markets, while leveraging both internal and external construction resources to meet the annual target. Ken Dixon’s arrival as TDS Telecom CEO is expected to bring further focus to penetration and sales strategies.
Spectrum monetization and capital returns: Pending spectrum sales to AT&T and Verizon are anticipated to provide $2 billion in proceeds, with plans for special dividends and a future regular dividend policy once transactions close, subject to regulatory approval. Management is also evaluating strategic M&A to supplement organic growth.
Tower portfolio optimization: Implementation of the T-Mobile master license agreement and efforts to bring sales operations in-house are expected to boost colocation revenue and operational efficiency. Management also highlighted unique tower market positioning, with a significant portion of towers having limited competition within a two-mile radius, supporting long-term tenancy and pricing.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be watching (1) successful execution of the T-Mobile master license agreement and the resulting ramp in tower colocation activity; (2) progress on closing the AT&T and Verizon spectrum sales and the timing of related special dividends; and (3) accelerated fiber address expansion, particularly in rural and edge-out markets. Updates on capital allocation and potential M&A initiatives will also be important markers of execution.

U.S. Cellular currently trades at $77.01, up from $74.33 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free).

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