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Dear Reader, Good morning! Today I want talk about Telephone and Data Systems (SYM: TDS). I got a bunch of questions from customers over the weekend, so let’s dive right in. 
The stock jumped 15% on Friday to $29.15 against our recommended price of about $16. So it’s up almost 100% now. I recommend holding it for now, and Takeover Targets members will get further instructions on what to do with it. ===Takeover Alert=== If you still haven't read our free "Our #1 Takeover Target for October” report...
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FREE: "Our #1 Takeover Target for October" === But I think there’s a good business lesson in this for everyone. Those of you from Chicago have heard of U.S. Cellular (SYM: USM) – it’s a Midwest firm with about 4.7 million cellphone subscribers. TDS owns 80% of U.S. Cellular. On Friday, U.S. Cellular said that they sold spectrum, part of their phone network, to Verizon for $1 billion, and the shares jumped. When we recommended TDS in Takeover Targets it was for exactly this reason… We anticipated U.S. Cellular would sell off their assets to big phone companies and get out of business. In our view, they are too small to compete. U.S. Cellular has 4.7 million customers. AT&T has 221 million subscribers… Verizon has 143 million subscribers… And T-Mobile has 113 million subscribers. So, think about it this way: Let’s say the government is auctioning off spectrum 5G… Now, when you have 200 million, 150 million subscribers, you have so much cash flow coming in that you can bid higher. When you only have 4.7 million subscribers you don’t have enough capital to outbid the number-one, number-two, number-three players. So what happens is the big companies – AT&T, Verizon, T-Mobile – start to gap open competitively in front of you and you get left behind, using more and more of your precious resources just to keep up. That is a very bad position to be in. Now, what we’ve noticed is that the management of TDS and U.S. Cellular, the Carlson family, basically – didn’t want to sell. Wall Street has been pushing TDS to sell U.S. Cellular for years. They’re like, “guys, you can’t compete. You don’t have the scale to compete with the big three.” And what’s been great for us about the news that came out on Friday, which sent TDS’s stock price up bigtime… Is that when a company starts selling its spectrum – it’s basically putting up the white flag of surrender. It signals, “alright, we’re not building out next generation networks. We’re going to sell this business off in pieces.” This is great for us! It’s given us a nice open gain in Takeover Targets. But I actually believe there’s more upside here. Now, I wouldn’t be buying it at this price because, who knows… anything could happen. Certainly, this market’s a little overvalued. At $16 a share it was a great buy. At $30 a share it’s a hold and let’s see what we’ve got going on here. But if we look at the breakup value of U.S. Cellular, we could see this thing go to $38, $40 a share if you break this up into pieces at the right price. And that would be a nice gain even from today’s price. In Takeover Targets I will instruct you on what to do with your TDS shares. We might start to liquidate a little bit of it in the coming days or weeks and then ride it out and see what we can do with the rest of it. But I just wanted to say this has been great news for members of Takeover Targets. And it’s a very important lesson in business… In every industry in the world, the top 3 are often the most dominant. When a size gap gets that big – meaning the number-1, 2, and 3 players have over 100 million subscribers each, and you are like a number-5 or 6 player, with 4 or 5 million subscribers… You cannot compete. The scale of the big companies just kills you. And you know, it’s funny – we’re watching that happen right now in a bunch of industries… Take streaming – we’re seeing Amazon, Netflix, Apple TV blow away the old studios like Paramount, MGM. Because they have so many subscribers, these guys have so much cash they can really bid up the prices they will pay for original programming. The small studios can’t compete so they’re selling off to the big guys who would ultimately out-cash and out-muscle them. This is an important lesson in business – when to put up the white flag and say “uncle.” And it’s important to takeover investing – to anticipate these kinds of deals and profit from them. We have a near-100% win-rate since inception in Takeover Targets. If you haven’t checked out the company yet that is my No. 1 Takeover Target for October, go here now for the ticker>>> "The Buck Stops Here," 
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