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U.S. Cellular to boost capex for 5G, adds Samsung as supplierU.S. Cellular to boost capex for 5G, adds Samsung as supplier

U.S. Cellular said it could spend roughly $1 billion on capital expenses in 2020, a dramatic increase from 2019. Samsung could get some of that cash.

Mike Dano

February 21, 2020

3 Min Read
U.S. Cellular to boost capex for 5G, adds Samsung as supplier

U.S. Cellular – the nation's largest regional wireless network operator with around 5 million customers – said it expects to increase spending on its network in 2020 to help fuel 5G launches.

Concurrently, the company announced it would add Samsung as a 5G equipment vendor alongside Nokia and Ericsson, its two previously announced 5G vendors. The announcement represents yet another win for Samsung, which has been gaining significant ground in 5G equipment sales among nationwide US wireless network operators like Verizon and AT&T. U.S. Cellular said Samsung would also supply 4G equipment under the new agreement.

For its 5G buildout, U.S. Cellular said capital expenses in 2020 could be as much as $950 million. That's far more than the $710 million the operator spent on its network and operations during 2019.

And the company offered an unlabeled chart showing exactly how it would allocate its 2020 capex:

Figure 1: U.S. Cellular offered a breakdown of its 2019 and 2020 capex. (Source: U.S. Cellular) U.S. Cellular offered a breakdown of its 2019 and 2020 capex.
(Source: U.S. Cellular)

The chart is noteworthy considering operators like AT&T and Verizon do not offer that level of specificity when it comes to capex.

U.S. Cellular said late last year it would launch 5G in its unused 600MHz spectrum in the first quarter of this year using hardware from Ericsson and Nokia. The deployment will initially stretch across Cedar Rapids, Davenport, Des Moines, Dubuque and Waterloo in Iowa, and parts of Green Bay, Madison, Milwaukee, Oshkosh and Racine in Wisconsin.

The operator said it would launch 5G operations in its millimeter wave spectrum, initially using its macro towers, at a later date, likely in 2020.

U.S. Cellular joins T-Mobile in using 600MHz for 5G.

During the company's quarterly conference call with analysts, CEO Kenneth Meyers said 5G is a cheaper and more efficient way for the provider to boost network speeds and support more customers than building additional cell towers. He also said the technology would open up new revenue opportunities for U.S. Cellular in the areas of fixed wireless and government services.

Meyers also addressed questions from analysts about the merger of Sprint and T-Mobile, as well as the possibility that Dish Network will enter the US wireless industry. He said the developments likely would not affect U.S. Cellular much because the company targets smaller markets where bigger companies often don't spend much time and effort.

Sprint and T-Mobile appear to be removing the final barriers to their proposed merger, a transaction that is also designed to position Dish to enter the wireless market, first as a reseller and later as a network operator.

Meyers hinted U.S. Cellular is working to potentially take share from the newly combined Sprint and T-Mobile, noting that there are millions of Sprint customers in U.S. Cellular's markets.

However, Meyers acknowledged that Charter – through its new Spectrum Mobile wireless offering – did steal shares from U.S. Cellular during the course of 2019. However, he said the cable company mainly gained less valuable feature phone customers from U.S. Cellular, and that he expects the operator's losses to Charter to slow in 2020.

About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. He has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones. Mike is based in Denver and can be reached at [email protected]. Follow @mikeddano on Twitter and find him on LinkedIn.

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