DT Asks for $1B Prenup for Sprint, T-Mobile — WSJ

T-Mobile ended up with a nice pile of $3 billion when AT&T wasn't permitted to acquire it in 2011. Now, Deutsche Telekom, which owns 67% of the "uncarrier," is hoping for similar compensation if a deal with Sprint doesn't go through.

The Wall Street Journal reported over the weekend that Deutsche Telekom AG (NYSE: DT) is asking for more than $1 billion if Sprint Corp. (NYSE: S) fails to acquire its US subsidiary T-Mobile US Inc. , as well as promises to preserve T-Mobile's brand and parts of its management team. (See Report: SoftBank Preps $19B Bid for T-Mobile.)

The situation is similar to when AT&T Inc. (NYSE: T) attempted to acquire T-Mobile. The cash and spectrum that T-Mobile earned when it failed to get approval enabled it to expedite its LTE rollout and make its big "uncarrier" push, targeting its almost-parent company most fiercely. If Deutsche Telekom's demands are agreed to, it will put it in a similar win-win situation whether the deal goes through or not. (See T-Mobile Gets Spectrum in AT&T Breakup.)

This is, of course, all still conjecture. The Sprint and T-Mobile tie-up has to be one of the most hinted at and discussed-without-discussing deals in recent telecom history. Sprint has yet to make a formal offer for its small but growing competitor, although sources have said that will happen sometime this summer. (See T-Mobile Sacrifices Costs for Customers.)

The WSJ, however, is now suggesting the carriers could wait until 2015 until after the government's spectrum auctions, or until a new administration to attempt to merge. Right now, the carriers don't have a favorable environment for approval as regulators have said they are skeptical of the merger and will view it with scrutiny.

For its part, Sprint really can't afford to lose any more cash or assets to T-Mobile if the deal weren't to go through. It's likely weighing the question of whether it can survive another few years without T-Mobile if it does decide to revisit the merger in the future instead, or push through, at the risk of being denied, right now. (See Son: Dish Could Be Sprint's Great Ally.)

— Sarah Reedy, Senior Editor, Light Reading

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