In an effort to expand its coverage in the Midwestern United States, Sprint (NYSE:S) announced on Wednesday that the company had entered into an agreement to purchase spectrum and 585,000 subscribers from U.S. Cellular (NYSE:USM) for $480 million.
According to the agreement, Sprint will acquire 20 MHz of PCS spectrum in the 1900 MHz band in several Midwestern markets, including Chicago, and 10 Mhz of PCS spectrum in the St. Louis market. As of now, Sprint does not have as much available spectrum as AT&T (NYSE:T) and Verizon (NYSE:VZ). The additional megahertz will enable the company to increase its network speeds and supplement coverage in those areas as the carrier expands its 4G LTE service nationally.
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“This transaction will enable us to strengthen our business and become a more robust competitor,” Sprint chief executive Dan Hesse said in a statement. “Acquiring this spectrum will significantly increase Sprint’s network capacity and improve the customer experience in several important Midwest markets.”
The transaction is still subject to regulatory approval by the U.S. Department of Justice and the U.S. Federal Communications Commission, but is expected to close in the middle of 2013.
The Washington Post reported that the sale will help U.S. Cellular concentrate on its strongest markets. The company’s third-quarter results, reported on Wednesday, revealed that net income dropped 43 percent over the three-month period as the company subsidized sales of new smartphones.
Shares in the company are trading slightly above Tuesday’s close of $39.02 ,while Sprint shares were down seven cents at $5.66 on Wednesday morning.
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