Mergers & acquisitions

AT&T & T-Mobile: Sprint Sues, DT Confirms $3B Fee

Deutsche Telekom AG (NYSE: DT) confirmed Tuesday that it will receive a breakup fee if it's unable to sell T-Mobile US Inc. to AT&T Inc. (NYSE: T), a sale which seems to be getting trickier as now Sprint Corp. (NYSE: S) is also suing to stop the merger.

The latest DT announcement is in contrast to a Reuters source's suggestion that the fee is contingent on a number of stipulations, including the merger being approved by the Federal Communications Commission (FCC) within a certain time frame. The fee is set at US$3 billion in cash and another $3 billion worth of assets like spectrum and roaming agreements.

Shares in Deutsche Telekom have taken a hit following news that the U.S. Department of Justice was suing to block the merger. The carrier is joining AT&T in fighting for the deal's approval from the FCC and tells Bloomberg it is open to making concessions to see it passed. (See DoJ Blocks AT&T/T-Mobile Merger, Euronews: DT Fights to Keep AT&T Merger Alive and Euronews: DT Slumps Following AT&T Bombshell.)

If the deal is to go through, concessions will certainly be required in the face of so much opposition. The latest hurdle comes from Sprint Corp. (NYSE: S), which joined the DoJ in suing to block the merger. The vocal opponent filed suit on Tuesday in a D.C. federal court, citing violation of Section 7 of the Clayton Act on antitrust.

Why this matters
T-Mobile will face a number of challenges if the merger is blocked, making $6 billion chump change compared to the $39 billion purchase price AT&T would have paid Deutsche Telekom for it.

Financials aside, however, life will change for AT&T and T-Mobile if the merger is not approved, especially from a 4G Long Term Evolution (LTE) perspective. Light Reading Mobile looks at both companies' uncertain wireless futures in "What Could T-Mobile Do After AT&T?" and "AT&T: What It Loses Without T-Mobile."

For more
Read more on AT&T and T-Mobile's urge to merge below.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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