It’s a hard-knock life for most small US wireless carriers

Mario Gabelli looks like he’s fed up with UScellular.

“In light of the extraordinarily poor performance and the lack of focus as a result of TDS’ ownership of US Cellular,” Gabelli said he plans to attempt a takeover of the company’s board at its next shareholder meeting.

Gabelli, a billionaire, owns around 4.5 million shares of TDS, a fiber provider that’s also the majority owner of UScellular. With around 5 million mobile customers across 21 US states, UScellular is America’s biggest regional wireless network operator. But it’s suffering from increasing competition, and the company’s shares have lost around 40% of their value over the past year as a result. Indeed, as noted by FierceWireless, UScellular recently engaged in an undisclosed number of layoffs.

“A change in tactics has to be examined and pursued,” Gabelli argued.

A UScellular representative declined to comment on Gabelli’s letter, issued earlier this month.

To sell or not to sell

UScellular isn’t alone. As T-Mobile, AT&T and Verizon all expand their networks into more rural areas, they’re putting additional pressure on the small wireless network operators that were previously the only option in such locations.

“We’re going to keep going until it doesn’t make sense anymore,” said Mike Laskowsky, the network manager of United Wireless. The company operates a mobile and fixed wireless network across 120 cell towers in parts of Southwest Kansas. “We’re going to stay in mobile as long as we can.”

He said AT&T, Verizon and T-Mobile have all moved into United’s coverage area in recent years, essentially eliminating the opportunity for the company to provide roaming services to those bigger wireless network operators. As a result, he said United’s average revenues per user have been falling, and its total mobile customer base now sits at around 16,000 from a high point of 20,000.

United had planned to maintain its competitive footing with an early move into 5G, but the US government’s push against Huawei – United’s primary network equipment vendor – scuttled those plans. Now United is working to replace Huawei equipment with gear from Nokia while concurrently upgrading its 4G network to 5G. Laskowsky said United has already launched 5G across roughly two dozen cell sites with a goal of ultimately broadcasting 5G from 50 total cell towers.

“We do everything to make our network the best network,” Laskowsky explained. But he said that the company remains open to the idea of getting out of mobile by selling itself to a bigger player, if the right kind of deal comes along.

A number of United’s peers have already done so. West Central Wireless in Texas, Missouri’s Chariton Valley Communications Corporation (CVCC), Montana’s Triangle Mobile and Bluegrass Cellular in Kentucky are among the smaller wireless network operators in the US that have exited the industry through a sale to a bigger operator.

As for UScellular, rumors have swirled for years that TDS might sell its mobile business. But industry insiders don’t believe the Carlson family, which maintains majority control over TDS, will ever be willing to engage in that kind of transaction.

Further, it’s unclear whether AT&T, Verizon or T-Mobile has the financial firepower for any major acquisition anyway, particularly after spending billions of dollars on midband spectrum for 5G. For example, Verizon’s recent rural acquisitions have centered on spectrum and network assets – actual mobile customers haven’t been included in the operator’s purchases.

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