T-Mobile raises UScellular synergy target to $1.2 billion, speeds integration

T-Mobile US Inc. (NASDAQ: TMUS) increased its expected annual cost synergies from the UScellular acquisition to approximately $1.2 billion, up 20% from the original $1 billion target, according to a company statement.

The wireless carrier also accelerated its integration timeline to approximately two years from the original three-to-four-year expectation. The UScellular transaction closed on August 1.

The revised synergy target comprises approximately $950 million in operational expense savings and approximately $250 million in capital expenditure synergies. Costs to achieve the integration remain at approximately $2.6 billion, within the original guidance range.

For the third quarter, T-Mobile expects the UScellular acquisition to contribute approximately $400 million in service revenues and approximately $125 million in core adjusted EBITDA. The company anticipates approximately $100 million in integration costs and approximately $175 million in depreciation and amortization expenses from the acquisition.

The acquisition will impact T-Mobile's consolidated postpaid average revenue per account by approximately $1.50 in the third quarter due to UScellular's lower pricing structure. T-Mobile maintained its overall postpaid customer guidance for the year.

Separately, T-Mobile expects to recognize approximately $350 million in costs during the third quarter related to its digital transformation initiatives, primarily non-cash expenses associated with retiring billing technology software. The company also anticipates an additional $120 million in depreciation, amortization and integration expenses from recent acquisitions outside of UScellular and network investments.

These transformation and integration costs will be excluded from core adjusted EBITDA calculations.

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