May 13, 2002 12:00 PM,

U.S. CELLULAR ENTERS CHICAGO MARKET WITH PRIMECO BUY

Lynnette Luna

PrimeCo Personal Communications finally found a permanent home last week when U.S. Cellular agreed to buy its Chicago wireless business for $610 million in cash.

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PrimeCo has been in a state of turmoil since Verizon Wireless was forced to divest its part in the business-which was formed in 1994 as a joint venture between AirTouch, Bell Atlantic, Nynex and U S West-because of its merger with GTE Wireless. The PrimeCo business sat in a trust and was purchased by venture capital firm Clarity, which has been struggling to run the Chicago market in the midst of a telecom market meltdown.

"We were able to take advantage of the situation," John Rooney, president and CEO of U.S. Cellular, told Telephony last week. "We paid a price reflective of the declining values of wireless properties. This is where U.S. Cellular's financial strength comes in."

Chicago will be U.S. Cellular's first foray into a large market and provides a big boost to the company's Midwest footprint. The carrier's challenge will be to propel a struggling business with 350,000 customers from last place to become one of the top-tier carriers in that market. Rooney, the former president of Ameritech Cellular, knows the Chicago customer base well and is confident.

"They do have one of the highest-quality networks in Chicago," said Rooney. "We are not going to be a second-tier player."

U.S. Cellular expects to close the acquisition by the third quarter of this year. Rooney said the company isn't ruling out buying more large markets in the future.

"This demonstrates the fact that we are not in the business of waiting to be acquired," he said. "This is not a beached whale. This is a tiger shark."