T-Mobile plans to buy “substantially all” of U.S. Cellular’s wireless operations in a deal worth about $4.4 billion, the two companies announced Tuesday.

The deal would expand T-Mobile’s presence to millions of people in “underserved” regions, the company said, noting that 40 percent of U.S. Cellular’s customers live in rural areas. The wireless networks for those users can be improved because T-Mobile has more resources for upgrades “in the face of rising competition and increasing capital intensity required to keep pace with the latest technologies,” U.S. Cellular Chair LeRoy Carlson Jr. said in a statement.

It’s the latest megadeal from T-Mobile, which merged with Sprint in 2020 in a deal worth $26 billion. T-Mobile reported 119.7 million cellular connections at the end of 2023. U.S. Cellular’s roughly 4.5 million wireless customers will have the option to keep their phone plan or switch to one offered by T-Mobile.

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The agreement will cost T-Mobile roughly $4.4 billion, including $2 billion in debt assumption.

At that price, T-Mobile is paying about $1,000 per customer, which telecommunications consultant Chetan Sharma described as a good deal, given that the typical user eventually can generate $4,000 to $5,000 for the company.

The deal is still subject to certain regulatory approvals. The companies expect it to close in mid-2025.

Shares of U.S. Cellular rose more than 12 percent Tuesday. T-Mobile’s stock price rose less than 1 percent.

For U.S. Cellular, the agreement rids them of a “subscale business where margins were razor thin” and takes care of its debt, said Allyn Arden, managing director for telecommunications at S&P Global Ratings.

U.S. Cellular will retain 70 percent of its wireless spectrum and keep its cellphone towers but lease space on at least 2,100 of them to T-Mobile. Buying the company outright, analysts said, would have made T-Mobile too big of a player in some places because federal rules limit a single company to no more than 30 percent of an area’s available wireless spectrum.

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The spectrum that T-Mobile did pick up is probably in rural areas where it doesn’t currently have a footprint, Arden said.

The deal shows how hard it is for smaller cellphone carriers to survive, as the market remains concentrated in the hands of three giants: T-Mobile, AT&T and Verizon. “The smaller operators are disappearing from the U.S. market,” Sharma said.

The agreement also represents a good outcome for U.S. Cellular customers, analysts said. “U.S. Cellular had been looking for a buyer for a long time. They were struggling, and now they’ve found a buyer that can continue to servicing their existing customers,” Sharma said.

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