Update: Deutsche Telekom has stated it would consider “carving out some assets” from T-Mobile USA in order to continue the regulatory approval process for a deal with AT&T. Speaking to BusinessWeek Deutsche Telekom spokesman Philipp Kornstaedt says that DT is examining different scenarios and how they would play out in real life. With the report of T-Mobile needing to maintain a certain level of value in order to earn DT a break-up fee should the deal fail, Deutsche Telekom is pressed to ensure that any “carved out assets” don’t drop the value of the company below a specific valuation.
While it has been widely discussed that if the AT&T/T-Mobile deal were to fall through due to regulatory concerns, Deutsche Telekom would still come out ahead based on the multi-billion dollar break-up fee AT&T would be forced to pay. Unfortunately, new details have come to light courtesy of an early morning Reuters report indicating that AT&T might not have to pay the fee after all if certain conditions are not met.
“There are a number of options under which the (break fee) contract will not come into effect,” the person, who is familiar with the contract, told Reuters on Monday.
One condition under which AT&T could bypass the payment is if the deal hasn’t been given the green light by a certain date. The Reuters insider says if the unknown timeframe passes, the contract is null and void and that AT&T isn’t liable for the break-up free. In addition, T-Mobile is not allowed to fall under a certain financial value which could happen if regulators demand AT&T to sell of portions of T-Mobile in order to gain approval for the deal.
With the Department of Justice seeking an injunction to block the deal and with AT&T working on a two-prong attack to gain regulatory approval the fee and the deal itself all seem suddenly very much up in the air.