AT&T May Earn Discount On T-Mobile If Concessions Surpass Certain Value

An article published early (early!) this morning on Bloomberg opens up the possibility that AT&T can “lower the price it pays for T-Mobile USA Inc. if the remedies requested by regulators become too expensive according to three people with direct knowledge of the purchase contract.” In other words, if the regulator’s request are too expensive for AT&T, the company can get a reduced rate on their T-Mobile purchase price. A discount would be available to AT&T if the regulator requests surpass 20% of the deal’s original $39 billion dollar price tag or $7.8 billion.

T&T could also completely walk away from the deal and pay Deutsche Telekom the break-up fee if the requested concessions top out at more than 40% ($15.6 billion) of the $39 billion dollar value. While AT&T begins to mount it’s defense against the Department of Justice lawsuit AT&T is also aware that they may be able to get some T-Mobile assets at a lower price than originally intended even if they are forced to give up more spectrum or customers than they had originally planned.

“It would not be rational for Deutsche Telekom to negotiate from a point of weakness, which they would appear to be in should the existing deal fail,” Robin Bienenstock, an analyst at Sanford C Bernstein in London, wrote in a note. “T- Mobile USA could be an asset valuable to many, and with his term recently renewed as CEO Mr. Obermann has every reason to play the long game, rebuild negotiating strength through business momentum and look for better value in 18-24 months time.”

When AT&T considers whether or not they are at a point where they will drop their T-Mobile bid, the variables as defined in the non-public portion of the contract state the bid can be dropped (with AT&T paying the break-up fee) if the threshold tops twice the $7.8 billion stated in the public part of the filing according to Bloomberg sources.

Once again this story just keeps getting better and better.

Bloomberg

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  • Anonymous

    The Gov’t will do their damndest to make this deal so unattractive that AT&T is better off spending $39B on their own shotty network.

    • MIKEEEEE

      P/S that’s what att is trying to avoid, spending money on their own network. imagine how many towers they could connect to their already existing fiber in rural and exurban areas instead of commercials that are produced outside the usa on the cheap.

      wait, that would be too easy.

      showing left hand drive trucks in a commercial touting their network is an outright lie.

      • Fred

        If you look at just the networks combining (ignore the business BS and everything else) it would actually help customers.

        TMO’s network is built up in cities, and that’s where ATT’s is overloaded. It would help to offload that congestion.

        Conversely, Att’s covers much much more geographically, where T-Mobile has little or no coverage, so users in those areas would come out ahead also.

        • MIKEEEEE

          take away my t-mo wifi calling plus data and my att coverage is a weak 2 bars and data speed down is 87k on ATT 850 EDGE outside my front door.

          if att was better, i would have left t-mo 3 years ago when i moved here.

          if att was so good i would have stayed with them in 2001 when i switched to voicestream.

          ANDROID devices are basically the same, cell phone providers’ service varies widely. 

          i’ll stick with t-mo as long as i can, then go anywhere but, att and take my 4 lines of service with me.

          one of those lines i ported to t-mo from bellsouth 3 years ago.

          sprint/google voice is looking better and better daily.

        • Fred

          Fair enough. Att around where I live is pretty good, and actually has service in several of the little towns around me.

        • Fred

          Fair enough. Att around where I live is pretty good, and actually has service in several of the little towns around me.

        • Fred

          Fair enough. Att around where I live is pretty good, and actually has service in several of the little towns around me.

        • Fred

          Fair enough. Att around where I live is pretty good, and actually has service in several of the little towns around me.

        • Fred

          Fair enough. Att around where I live is pretty good, and actually has service in several of the little towns around me.

        • Fred

          Fair enough. Att around where I live is pretty good, and actually has service in several of the little towns around me.

        • Fred

          Fair enough. Att around where I live is pretty good, and actually has service in several of the little towns around me.

        • MIKEEEEE

          take away my t-mo wifi calling plus data and my att coverage is a weak 2 bars and data speed down is 87k on ATT 850 EDGE outside my front door.

          if att was better, i would have left t-mo 3 years ago when i moved here.

          if att was so good i would have stayed with them in 2001 when i switched to voicestream.

          ANDROID devices are basically the same, cell phone providers’ service varies widely. 

          i’ll stick with t-mo as long as i can, then go anywhere but, att and take my 4 lines of service with me.

          one of those lines i ported to t-mo from bellsouth 3 years ago.

          sprint/google voice is looking better and better daily.

        • http://pulse.yahoo.com/_AWWIKW6MNPUHOC4OVSHWUDWAHM Fabio

          If customers who are with AT&T are receiving dropped calls constantly because of congestion, they are suffering because they want to. They are free to switch carriers whenever they want. T-Mobile isn’t congested… ;)

    • MIKEEEEE

      P/S that’s what att is trying to avoid, spending money on their own network. imagine how many towers they could connect to their already existing fiber in rural and exurban areas instead of commercials that are produced outside the usa on the cheap.

      wait, that would be too easy.

      showing left hand drive trucks in a commercial touting their network is an outright lie.

  • jon

    At&t will not win its case fighting the DOJ. The DOJ used very strong lanuage. Their were no signs in the language they used to even suggest they would reconsider. They flat out said it’s bad for consumers, innovation and will result in higher prices. I think the spotlight needs to be squarly on the fcc. It isn’t a good thing that the fcc tied the Qualcom and T-Mobile deals into one review. My guess is the the fcc follows the lead of the DOJ and shuts down the T-Mobile deal. But the fcc will throw At&t a bone and allow the Qualcom spectrum deal to pass and pass VERY quickly. What say you?

  • jon

    At&t will not win its case fighting the DOJ. The DOJ used very strong lanuage. Their were no signs in the language they used to even suggest they would reconsider. They flat out said it’s bad for consumers, innovation and will result in higher prices. I think the spotlight needs to be squarly on the fcc. It isn’t a good thing that the fcc tied the Qualcom and T-Mobile deals into one review. My guess is the the fcc follows the lead of the DOJ and shuts down the T-Mobile deal. But the fcc will throw At&t a bone and allow the Qualcom spectrum deal to pass and pass VERY quickly. What say you?

  • Sendingjunk

    Att has a lot of money at stake and they also have a lot of money to spend, but I think this deal have become to publicized and scrutinize, therefore they’ll be soon come to their senses cut their loses and throw the towel and humiliated give up.

  • MagentaMadness

    We’re being told what was once 75% favorable of this going through is now down to 25%. 

  • MagentaMadness

    We’re being told what was once 75% favorable of this going through is now down to 25%. 

  • MagentaMadness

    We’re being told what was once 75% favorable of this going through is now down to 25%. 

  • Rfgenerator

    What I think we will see happen is that ATT is going to string this along for another year and few months in the hopes that Obama will be out and a new DOJ will be in place that will sign off on this sale faster than a bank robosigning a foreclosure document.

  • Cvette83

    HA. Love the Monster’s Inc picture.

  • Brians Android

    I would just like to say: I very much dislike at&t! I went with T-Mobile in the confidence that I would never ever have do business with that smug huge egotistical company again! And I do prefer gsm. If at&t get there grubby hands on T-Mobile that will be the end. Why couldn’t some other company step up to the plate? I don’t know,say Google perhaps. surely there is a company capable of purchasing T-Mobile and maintain good customer service while at the same time producing a profit. Beside at&t?

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  • Bigjohn7187

    So again we go back to, how do they expect to not only keep the current employees but rehire up to 5000 employees if they have to make even 10% in concessions? this has got to be stopped. in our current economy this deal is a killer.