T-Mobile wants to buy Shentel’s wireless business, but they can’t agree on a price

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We learned earlier this year that T-Mobile was in negotiations to acquire the wireless business of Sprint affiliate Shentel following T-Mo’s acquisition of Sprint, and now it looks like that purchase is going to happen.

T-Mobile and Shentel have revealed in filings with the SEC that T-Mo has notified Shentel that it plans to exercise its option to purchase the assets of Shentel’s wireless operations. As part of the affiliate agreement that Shental and Sprint struck way back in 1999, any company that acquired Sprint could buy Shentel’s wireless business for 90% of the “entire business value.”

However, this isn’t a done deal quite yet. Both companies also say that they were unable to to agree to an effective appraisal of Shentel’s assets. On August 24, Shentel sent a “Notice of Dispute” to T-Mobile regarding the appraisal that will kick off a dispute resolution process.

This means that if T-Mobile and Shelten can’t come to an agreement on the price within 60 days, the deal could go into arbitration. Raymond James analysts told Light Reading that this would include three independent appraisers each determining a valueon Shentel’s wireless business. If all three appraisals are within 10% of each other, the average will be used. If two are within 10% of each other, the average of those two will be used. If none are within 10%, T-Mo and Shentel will go with the middle valuation.

Shentel operates its network in parts of Virginia, West Virginia, Kentucky, Ohio, and Pennsylvania. As of June 30, 2020, it had 1.1 million customers. T-Mobile would probably like to add those customers and markets to its own network as a way to continue to grow, adding to the momentum of its own customer additions plus the Sprint subscriber base that, according to T-Mo, helped push it past AT&T to become the No.2 carrier in the US.

Via: Light Reading
Sources: Shentel (SEC), T-Mobile (SEC)

Tags: , , ,

  • Shaun Michalak

    I am confused.. What exactly do they get with the purchase?? Is it just towers, or do they get actual spectrum (like bands 2 and 4), or what.. I saw something about them having and owning towers, and that they had something like 1.1 million customers.. But I am not sure if that was wireless, or with all of their ventures..

    • Raylz

      Probably both but we won’t know until it’s finalized

    • riverhorse

      They have a ton of fiber in place, and already provide gb wired internet, phone, cable, & hotspot.

      • Shaun Michalak

        That is true.. But T-Mobile is only talking about getting their “wireless” part of the company, not the company in whole.. From what I have read, it looks to me like they just sell stuff under the Sprint name, almost like a subcontractor.. But they also own towers, but no spectrum.., From what I have read, 4 years ago they did have some spectrum, but made a deal with Sprint to be the sole provider of customers in their area, and Sprint got to take over all the Spectrum in the area..

        My opinion, since T-Mobile does not care about actually “owning” the actual towers (proved by them selling their own owned towers a few years ago), I think that they should rent space off of the towers, like they do everywhere else, leaving that part for Shental to keep, along with the fiber lines that are there.. But just take over the customer and name end of things.. This will still leave them with a decent amount of resources to supplement their other ventures as a company, but should also meet T-Mobiles wants at the same time.. From what I have read, 65% of their revenue comes from their wireless part, and leaving the towers end of things to them, would still leave them with some revenue and business venture in that market, to help keep the company going..

        Here is what I have found..

        “the Company has been the exclusive Sprint PCS Affiliate providing wireless mobility communications network products and services on the 800 megahertz (MHz), 1900 MHz and 2.5 gigahertz (GHz) spectrum ranges in a multi-state area covering large portions of central and western Virginia, south-central Pennsylvania, West Virginia, and portions of Maryland, North Carolina, Kentucky, and Ohio. The Company is licensed to use the Sprint brand name in this territory, and operates its network under Sprint’s radio spectrum licenses.”

        “Within this designated Sprint Affiliate Area, Shentel has exclusive use of the Sprint brand names and Sprint’s licensed spectrum in the 800 MHz, 1900 MHz and 2.5 GHz bands. Shentel’s nearly 2,000 cell sites cover 6.3 million POPs”

        “Shentel’s Tower segment leases space on 225 owned towers to the company’s Wireless segment and other wireless service providers in the region.”

    • JG

      From an article posted today (a week after this), in case you didn’t read it…

      Also of note is that Shentel won a total of 262 PALs in 74 counties, spending $16.118 million for them. T-Mo is in the process of buying Shentel’s wireless assets, so those PALs could eventually become T-Mobile’s.

      So it would seem, they have at least some 3.5GHz spectrum if nothing else. I’d imagine they probably have some other spectrum to, but that’s just an assumption on my part.

      • Shaun Michalak

        I do not know.. I do know I looked up that site that gives who has what spectrum in different areas.. I could not find their name on that list anywhere, which is why I am assuming that they had none.. and the little spectrum that they did have, which they got from a merger with another company, they traded to Sprint, for Sprint customers.. But looking at it from the Shentel side, if T-Mobile does not buy them out, then they are going to need spectrum to support their customers, and this will give them a start to do just that.. I imagine that is why they bought what they did.. But that is just a guess on my side..

        Either way, these auctions are about the only way for them to get some spectrum now.. and on that note, if T-Mobile is buying out their wireless side, then T-Mobile has nothing to lose by letting them win the auction..

  • superg05

    THERE TRYING TO PUSH THROUGH MERGERS WHILE REPUBLICANS ARE IN CHARGE BUT ELIMINATING CHOICE IS NOT GOOD IT ONLY LEADS TO PRICE INCREASES THINK OF INTERNET PROVIDERS IN YOUR AREA

    • Acdc1a

      This is not a “choice.” This was a Sprint affiliate offering their own flavor of Sprint service at Sprint’s prices.

      • Shaun Michalak

        and as the only “Sprint” name too.. They had an agreement that all “Sprint” customers in their area, were to be Shentel customers, so the main Sprint company had no customers there because they were traded to shentel for Shentel’s spectrum years ago..

    • marque2

      Wow now we have free market socialists. Trump seems to have the power to create anything

      • Losmackie

        socialism could do itself a major favor by turning to true free market capitalism. Not crony capitalism either.

    • riverhorse

      Cellular prices aren’t going up, just the opposite. They have been going down for many years, and to boot LEO satellite is arriving to further boost competition.

      Shentel “mainly” a business provider- i highly doubt they would have the wherewithal or inclination to beat TMO pricing… Especially because their coverage territory not blanketed always need to pay other carriers to fill their extensive coverage gaps.
      And anyway, from TMO side, they always grandfather eternally any lower price. And any higher pricing would not work under TMO name.

      Vast swathes of that multi state area have zero or minimal TMO signal, while Shentel has built their own towers… And most complementarily, have their own gb fiber in place. I’m fact, this is their core- TV, phone, broadband and WiFi hotspot- with cellular only added because you can’t survive these days without including it.

      This is a win-win for customers and carriers.

      And i always question those who complain that prices might go up- why the worry, present plans are grandfathered forever- and no one has ever answered. Maybe they’re worried about a prison term and expired plan?

      • Shaun Michalak

        From what I have read, they own 225 of the towers that they have service installed on.. Also, they traded all of their frequency for customers from Sprint years ago, so they just lease the name in their area.. In that aspect, if they left Shental as is, then what would happen is that Shental would end up being the seller of the services in those areas and states, but T-Mobile would still be the main provider as the backbone of the network, and they would use the T-Mobile name instead of Sprint, just as they have done with Sprint..

        This also begs the question.. Would they have Shental stores, if Shental used their own name, or would there be just T-Mobile stores, where T-Mobile sells all their current customers in that area to Shental to govern over?? But if they did, this would leave T-Mobile in not full control of all the customers under the T-Mobile name, which is what T-Mobile does not want..

    • Shaun Michalak

      Eliminate what choice?? Shentel is “NOT” a real provider.. They own “ZERO” spectrum.. From what I can find, Shentel basically leases the Sprint name in their area, and manages the customers in those areas too.. When Sprint was in business, as their own company, the main Sprint company had ZERO customers there as actual Sprint customers that they managed.. All customers in the Shentel area still only had one choice.. And since T-Mobile had ZERO towers in a lot of these areas before the merger, then you still can not have competition, because T-Mobile was not there..

      So basically, they either had Shentel via the Sprint name, AT&T, or Verizon as a carrier before, and now, if they take it over, then it will be T-Mobile, AT&T, or Verizon.. If they do not buy Shentel out, then that leaves 2 options.. Since with Sprint, it was an all or nothing deal, and Shentel will still have to rely on T-Mobile for actual service since Shentel owns no spectrum, that will lead to one of 2 outcomes.. Either T-Mobile does the same contract with them, which leads all customers to be Shentel customers.. Still just one option outside of AT&T and Verizon.. Or they break that agreement, and Shentel becomes a MVNO on their own, and you have 2 carriers, T-Mobile and Shentel..

      Either way, the customers are going to have just one carrier to rely on for service outside of AT&T and Verizon.. Because it is still going to ride on the back of the T-Mobile network.. Not only that, but with Shentel being so small, how many customers would stay with them, with them not being a national carrier (losing the Sprint name and going with their own) any more??

    • Losmackie

      Please do research before spewing out your opinion.

  • Trip

    There seems to be a lot of confusion here about who Shentel is and how they’re involved. Let me trying to clarify a bit.

    Shentel is Sprint as far as most average people are aware. They operate the Sprint network in the Sprint name in their region. And, in fact, they do an outstanding job of it. They generally have more towers than AT&T or Verizon, and I’ve heard that in some areas, their market penetration is around 50%. One of the only performance awards Sprint actually won state-wide in recent years was in West Virginia, where Shentel runs almost the entire state’s Sprint network. In the same areas, T-Mobile service ranks anywhere from absent to inferior. Lots of Band 2-only or Band 12-only deployments, lousy tower spacing, you name it.

    To put it in context using an example, in Buckingham County, VA, Verizon has 10 cell sites, as does regional carrier US Cellular. AT&T has 4. T-Mobile has 2, and both are 700 MHz-only deployments. Shentel has 17.

    Shentel owns no spectrum, but does use Sprint spectrum, and has something like a million customers and well over a thousand cell sites (possibly over two thousand; I haven’t counted). They built a pretty reliable PCS-spaced network in extremely rough terrain. They own some subset of those towers, as well as a lot of backhaul fiber, local cable operations, etc. Had T-Mobile not bought Shentel, either Shentel would have bought the T-Mobile network and customers in its region, or T-Mobile would have ceased operation in its region; in either case, Shentel would have remained an affiliate, but of T-Mobile.