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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

sarahthomas1011 12/5/2012 | 4:54:43 PM
re: AT&T & T-Mobile: Sprint Sues, DT Confirms $3B Fee

I'm surprised it took Sprint this long to sue. Guess it's hoping to be the straw that broke the camel's back after the DOJ sued as well.

kaps 12/5/2012 | 4:54:41 PM
re: AT&T & T-Mobile: Sprint Sues, DT Confirms $3B Fee

Pretty smart timing by Sprint, even from a non-lawyer standpoint. Makes more sense to lend your "support" to the gubmint effort rather than lead the charge.


I still think the deal is going to go through, in some fashion. Be interesting to see how T-Mobile and AT&T assets get divested if so. Maybe this is why Sprint delayed its 4G uber strategy session?

kaps 12/5/2012 | 4:54:41 PM
re: AT&T & T-Mobile: Sprint Sues, DT Confirms $3B Fee

Pretty smart timing by Sprint, even from a non-lawyer standpoint. Makes more sense to lend your "support" to the gubmint effort rather than lead the charge.


I still think the deal is going to go through, in some fashion. Be interesting to see how T-Mobile and AT&T assets get divested if so. Maybe this is why Sprint delayed its 4G uber strategy session?

joset01 12/5/2012 | 4:54:41 PM
re: AT&T & T-Mobile: Sprint Sues, DT Confirms $3B Fee

Seems a bit silly on Sprint's part to me. If the DoJ can't stop it what difference will Sprint make?

Jeff Baumgartner 12/5/2012 | 4:54:41 PM
re: AT&T & T-Mobile: Sprint Sues, DT Confirms $3B Fee

Wonder if this is Sprint just piling on after the DoJ filed, or if Sprint intended to do this all along and the DoJ just beat them to the punch.  Suppose it doesn't matter a whole lot on who pulled the trigger first, but when the gov't steps in, that $3B fee is looking more and more likely. JB  

sarahthomas1011 12/5/2012 | 4:54:40 PM
re: AT&T & T-Mobile: Sprint Sues, DT Confirms $3B Fee

But, if the FCC doesn't stop it, maybe Sprint could help influence just how many concessions AT&T has to make.


 

sarahthomas1011 12/5/2012 | 4:54:39 PM
re: AT&T & T-Mobile: Sprint Sues, DT Confirms $3B Fee

And here's Sprint's entire complaint: http://cdn0.sbnation.com/podcasts/Sprint-ATT-complaint.pdf

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