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US Cellular pulls out of Chicago, sells market to Sprint

U.S. Cellular FIeld.  | Rich Hein~Sun-Times file photo

U.S. Cellular FIeld. | Rich Hein~Sun-Times file photo

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Updated: December 9, 2012 7:32PM

CHICAGO — U.S. Cellular said Wednesday it has reached a deal to sell markets in Chicago, St. Louis and other parts of the Midwest to Sprint Nextel Corp. for $480 million, part of a strategic move to focus on its stronger markets. The move will cost 640 jobs in the Chicago area, including 160 in the city.

Overland Park, Kan.-based Sprint will buy spectrum and 585,000 customers in Illinois, Indiana, Michigan, Missouri and Ohio, which is 10 percent of U.S. Cellular’s customer base.

U.S. Cellular will continue to have 1,400 associates in the Chicago area — including 860 at its headquarters, where no cuts are planned — the company said.

But upon completion of a transition services period, the majority of its retail, engineering and business support associates will lose their jobs, according to the company. During the transition period, the company may keep open certain retail locations in the affected markets and will provide certain transition services to Sprint, U.S. Cellular said. But over time, both company- and agent-owned stores will be closed.

The company said it will not change the name of U.S. Cellular Field.

“We will continue to be headquartered here in Chicago and our enthusiasm for Chicago sports remains the same ,” David Kimbell, chief marketing officer for U.S. Cellular, said. “Our naming rights to the ballpark are not a part of this deal with Sprint. The White Sox are a great partner and we look forward to continuing our relationship with them.”

The affected markets generated service revenues of roughly $340 million, or 11 percent of reported consolidated service revenues for the nine months ended Sept. 30, the company said. But after all direct and indirect costs, the markets experienced an operating loss.

“In the dynamic wireless marketplace, we have a clear strategy to accelerate profitable growth and increase return on investment over the long term, and we are taking decisive steps to achieve it,” U.S. Cellular President and Chief Executive Officer Mary Dillon said. “Exiting these markets enables us to play to our strengths in markets where we have higher penetration and where we can effectively sharpen our proven strategy to differentiate the U.S. Cellular customer experience from other wireless carriers.”

The company will continue to serve more than 5.2 million customers.

U.S. Cellular and Sprint will enter into transition services agreements for network operations and billing and customer service, and U.S. Cellular will retain its direct and indirect ownership interests in roughly 560 towers and other spectrum in the affected markets, U.S. Cellular said.

The sale, which is subject to regulatory approval, is expected to close in the middle of next year. U.S. Cellular said the transition and exit costs are expected to reduce facilities expenses by more than $3 million annually beginning in 2014.

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