If the AT&T and T-Mobile merger fails to gain approval from the FCC, FTC and DOJ then AT&T will pay T-Mobile a $3 billion breakup fee and transfer over some AWS spectrum it doesn’t need for its LTE deployment and grant T-Mobile a roaming agreement at an unknown value. The reverse breakup fee is about 7.5% of the total purchase price and the typical fee in takeovers is often closer to 3 percent. Is T-Mobile just playing poker knowing the deal won't ultimately get approved? Agreeing to this merger could simply be a smart way for T-Mobile to gain more LTE spectrum and become more competitive in their conversion to LTE. Did Deutsche simply sucker AT&T in to getting more money and coverage because they get paid regardless. Very smart if you ask me and hope the real winner here is T-Mobile and their customers.
“The breakup fee was very important to us in the negotiations,” Deutsche Telekom Chief Financial Officer Timotheus Hoettges said on a conference call today. “In the intensive discussions, with lawyers, economists, we concluded that we could be optimistic that we could get regulatory approval.” See Bloomberg Deutsche Telekom negotiated with AT&T to pay the $3 billion and give it rights to some wireless spectrum if the merger deal could not be completed.
