Shares of both United States Cellular and Telephone & Data Systems saw a significant increase on Friday, as the boards of both companies announced their intention to explore strategic alternatives for UScellular.
UScellular’s stock rose by 65% to $28.78 during midmorning trading, following a low point of $13.79 on June 2.
TDS also witnessed a surge in its shares, rising by 62% to $12.81. TDS stock hit its 52-week low of $6.44 on June 2 as well.
TDS, which currently holds about 83% ownership of UScellular, has hired Citi as its financial advisor and engaged legal representation to assist with the UScellular review. Furthermore, UScellular’s independent directors have also secured a financial advisor and legal counsel.
In addition to the news of strategic alternatives, UScellular disclosed its second-quarter earnings, which fell below analysts’ expectations. The wireless phone company reported earnings of $5 million, or five cents a share, compared to last year’s earnings of $21 million, or 25 cents a share. Analysts surveyed by FactSet had anticipated earnings of $17 million, or nine cents a share.
Meanwhile, TDS experienced a drop in revenue and recorded a loss in the second quarter, primarily due to its UScellular business. The telecommunications company reported a net loss of $19 million, or 17 cents a share, compared to a profit of $18 million, or 15 cents a share, during the same period last year. Analysts surveyed by FactSet had predicted a loss of four cents a share.