(Updated With Deutsche Telekom Statement) AT&T Might Not Be Required To Pay T-Mobile Break-Up Fee After All?

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.

Reuters

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  • http://cosmicbreeze.tumblr.com/ DtheArtist

    *waits for AT&T to fail* please…

  • http://cosmicbreeze.tumblr.com/ DtheArtist

    *waits for AT&T to fail* please…

  • Bb6h22lude4

    The FCC should break up AT&T and give their spectrum away lol.

  • Bb6h22lude4

    The FCC should break up AT&T and give their spectrum away lol.

  • Bullshit

    The Date is in September for approval, and there is also an an EBITDA target as well. 

  • Bullshit

    The Date is in September for approval, and there is also an an EBITDA target as well. 

  • Bb6h22lude4

    I think you made a typo, you typed free instead of fee.

  • Bb6h22lude4

    I think you made a typo, you typed free instead of fee.

  • Bullshit

     Take the DOJ out of the mix, couldn’t the FCC nix the deal without having to go to court?

  • Fred

    I’m convinced now,  AT&T is the Anti-Christ.

  • Fred

    I’m convinced now,  AT&T is the Anti-Christ.

  • Fred

    I’m convinced now,  AT&T is the Anti-Christ.

  • K3redwood

    I TRULY DON’T WANT THIS DEAL TO GO THROUGH! THERE WILL BE WAY TO MANY THINGS THAT WILL GO WRONG AND  T-MO CUSTOMERS WONT TAKE THAT CRAP!

  • mike

    hoping the fcc says no go.   At&T can’t be allowed to buy second largest GSM competitor.  

  • Anonymous

    This is crazy!!!! I should’ve known there were hidden clauses concerning this breakup fee. DT execs must be fuming right now……and ATT is probably beginning to feel like this whole acquisition isnt worth it anymore

  • josue cifuentes

    i hope D.O.J says no cause at&t sucks and people don’t want this to happen if it does then its game over for t-mobile

    • Anonymous

      DOJ already said no.. we’re waiting for the FCC’s decision.

    • Anonymous

      DOJ already said no.. we’re waiting for the FCC’s decision.

    • Anonymous

      DOJ already said no.. we’re waiting for the FCC’s decision.

  • http://twitter.com/SParKlngCyaNide SparklingCyanide

    Oh wonderful….now they want to GUT US!!  -_-  looks as if no matter what happens, our beloved Magenta is sure never to be the same again…  I guess I”ll start looking at Verizon or Sprint soon  = /

  • MK Terra

    Wait, these conditions make no sense.  How can a breakup fee depend on *approval* of the deal?  If it’s approved, there IS no breakup!

  • MK Terra

    Wait, these conditions make no sense.  How can a breakup fee depend on *approval* of the deal?  If it’s approved, there IS no breakup!

    • Anonymous

      I was wondering the same thing! Besides, if a deal could be struck where tmos assets would be split, wouldn’t that change the whole agreement? If the doj would allow att to acquire half of tmo usa, I doubt att would pay 39B for that. However, att paying 20B for half of tmo usa seems realistic on both sides considering sprint offered what 24B for 100%? Dt would need to find a buyer for the other half though.

      • IT Guy

        I’m not positive here, but I’m guessing rather than revaluing the purchase and all of that, they’d be allowed to buy all of T-Mobile but then be required to turn around and sell off assets..

      • IT Guy

        I’m not positive here, but I’m guessing rather than revaluing the purchase and all of that, they’d be allowed to buy all of T-Mobile but then be required to turn around and sell off assets..

    • OKDave

      Not sure, but I think it may be cloudy wording. Regulators might require T-Mobile to divest itself of certain assets before it would consider approval, but even if they did perform the divestiture, the deal could still be nixed. If the loss of assets devauled T-Mobile below the breakup value threshhold, the breakup fee would no longer apply. 

  • johnny bravo

    Hate to say it but at this point the best thing that could happen for T Mobile and its employees is for this aquisition to go through. What happens if it doesn’t?? The break up fee, if awarded, goes to DT not TMo USA. TMo USA has steadily lost customers since the initial announcement. Sprint has certainly increased the gap between them and TMo, making it harder for TMo to recover. Plus DT obviously wants to wipe there hands of TMo USA so the next logical step would be to start selling off spectrum and even customers to other carriers. I love TMo and I wish the future was brighter but I believe that’s the way its headed without a successful ATT buy out.

  • johnny bravo

    Hate to say it but at this point the best thing that could happen for T Mobile and its employees is for this aquisition to go through. What happens if it doesn’t?? The break up fee, if awarded, goes to DT not TMo USA. TMo USA has steadily lost customers since the initial announcement. Sprint has certainly increased the gap between them and TMo, making it harder for TMo to recover. Plus DT obviously wants to wipe there hands of TMo USA so the next logical step would be to start selling off spectrum and even customers to other carriers. I love TMo and I wish the future was brighter but I believe that’s the way its headed without a successful ATT buy out.

    • ColdFeet

      Actually, T-Mobile lost fewer customers since the announcement than in the past couple years. Maybe the announcement helped them hang on to customers?

      • Dewey Cox

        They may have lost fewer but new adds have gone down

  • Anonymous

    “There’s no point in lamenting, we’ve got the authority’s complaint and now we have to deal with it,” he said, adding that the approval process is “still on schedule.”

    Separately, Deutsche Telekom said today it will allow customers in Germany to reserve the next generation of Apple Inc.’s iPhone as of today in anticipation of supply bottlenecks for the device. The operator will distribute coupons to consumers who request the successor model to the iPhone 4, according to spokesman Alexander von Schmettow. Cupertino, California-based Apple hasn’t released details about its next iPhone.

    Taken from the business week article dave referred to in his post. This just about sums up how dt feels about tmo usa. Trying desperately to rid itself of tmo usa while dt’s german customers get to reserve the next iphone…..sigh

  • Anonymous

    “There’s no point in lamenting, we’ve got the authority’s complaint and now we have to deal with it,” he said, adding that the approval process is “still on schedule.”

    Separately, Deutsche Telekom said today it will allow customers in Germany to reserve the next generation of Apple Inc.’s iPhone as of today in anticipation of supply bottlenecks for the device. The operator will distribute coupons to consumers who request the successor model to the iPhone 4, according to spokesman Alexander von Schmettow. Cupertino, California-based Apple hasn’t released details about its next iPhone.

    Taken from the business week article dave referred to in his post. This just about sums up how dt feels about tmo usa. Trying desperately to rid itself of tmo usa while dt’s german customers get to reserve the next iphone…..sigh

  • johnwall

    its ridiclious at&t should just pay the break up fee since no one know the specific level of value. at&t could just say it low so they wont have to pay break up fee. im surprise DT seem it doesnt want the break up fee its 3 billion dollars shoot i want it if they dont want it. And maybe DT would reconsider of not dropping tmobile usa because they would get the money and another 3 billion dollar worth of assets extra cell towers and more services. ohhh DT u funny but i love tmobile…

  • johnwall

    its ridiclious at&t should just pay the break up fee since no one know the specific level of value. at&t could just say it low so they wont have to pay break up fee. im surprise DT seem it doesnt want the break up fee its 3 billion dollars shoot i want it if they dont want it. And maybe DT would reconsider of not dropping tmobile usa because they would get the money and another 3 billion dollar worth of assets extra cell towers and more services. ohhh DT u funny but i love tmobile…

  • Anonymous

    Smh thry always gotsl something up their sleeve. They going to be serving T-Mobile assets like is aunt jemima old fashion pancakes

  • Anonymous

    The doj acts as though dt has non-telco buyers lined up if this att deal falls through. They’re crying wolf about competition if the deal gets approved, but don’t they realize that dt could close shop here in the US if the deal gets squashed? And the result of that would leave 3 major US carriers….the same result as an approved buyout. Granted, if the deal gets shut down, att wouldn’t reap the same benefits, but in either case a major carrier would be removed from the equation.

  • http://twitter.com/Vision77 Vision77

    Sorry but why does T-Mobile have to cannibalize itself to make the deal go through?  They spent like forever getting their network up to par…And wouldn’t T-mo selling portions of itself that At&t claims it desperately needs be like spitting in the face of the whole deal?  So lets just say the deal goes through who do you think will pay for the “NEW” At&t to make up the loss it took on the crippled T-mo deal?   You got it…. US and all of the other subscribers on the “NEW” At&t….T-mobile doesn’t want to be undervalued but I guess that’s risk they are willing to take….They are willing to bet the house on an unfair, unethical deal which has repercussions for all cell customers in the States…And, even if current T-mo subscribers plan to jump ship to Sprint, it may not be good…..As Sprint has already given some ques that it too will eventually raise its prices…..I don’t see why DT wants to sell of T-mo so bad in the 1st place.  They knew what they were getting into when they bought Voicestream…..And now that the network is up to par and obviously valuable, they want to sell it…I say T-Mobile has been valuable since they got that spectrum a few years back…..They have some top-notch devices, they have some good plans….I say they need to work on their marketing a bit…

    • Anonymous

      they’d need to revamp marketing and expand coverage…..which means no more value carrier

      • http://twitter.com/Vision77 Vision77

        Okay do it in three phases…revamp marketing to attract new customers….(if they get the 6 billion)….And gradually expand coverage….Current data speeds are acceptable so fall back on the LTE deployment for a little while….Also I think that getting the iPhone would definitely bring in some more revenue….(the million or so current iphone users on the network help with that argument)…I know a ton of (not-so-tech-savy) people who would ditch the death star/big red for an iPhone on T-mo….The demand for a nation wide value carrier is there…T-mo is in a position to supply it and be profitable…

        • Anonymous

          Your idea hinges on the fact that the deal gets rejected, dt gets the breakup fee money and has a change of heart regarding its commitment to tmo usa…..or the deal fails and another non-telco buyer emerges to pick up the pieces….

  • josefrontanez

    TMO will remain TMO and soon we will have both IPHONE 5 and SAMSUNG GALAXY S2 with Unlimited 4g and well get AT&T’S money,this just keeps getting better.

    • cirrob

      What part of this article was unclear to you?

    • derek 21

      the only reason tmo gets the iphone if they do is because of apple not tmo pushing for them to sell it on their network! tmobile could care less they already getting data money of atleast half those million iphone users!

    • derek 21

      the only reason tmo gets the iphone if they do is because of apple not tmo pushing for them to sell it on their network! tmobile could care less they already getting data money of atleast half those million iphone users!

    • derek 21

      the only reason tmo gets the iphone if they do is because of apple not tmo pushing for them to sell it on their network! tmobile could care less they already getting data money of atleast half those million iphone users!

    • http://tmonews.com David

      Seriously, what people of this article gives you any inclination that any of those things are going to happen, minus the GSII of course?!

      • derek 21

        because it’s already been posted on this site why tmo is more then likely going to get the iphone 5 based on apple wanting to have a world phone like they already do in china with the cdma capability  and sim card slot on one device.

        • http://tmonews.com David

          I have never posted why T-Mobile is more than likely to get it. We have only posted what analysts, track records and the likely scenario is. Never have I said they are likely to get it because Apple wants to have a world phone. Saying that’s possible and likely are very different.

        • http://tmonews.com David

          I have never posted why T-Mobile is more than likely to get it. We have only posted what analysts, track records and the likely scenario is. Never have I said they are likely to get it because Apple wants to have a world phone. Saying that’s possible and likely are very different.

      • derek 21

        because it’s already been posted on this site why tmo is more then likely going to get the iphone 5 based on apple wanting to have a world phone like they already do in china with the cdma capability  and sim card slot on one device.

  • derek 21

    It’s funny how this is still being covered, each day it’s something different the DOJ hasn’t been able to stop a major acquisition since Clinton’s Days and they went 1 for three lol, odds are against the gov’t not tmo and at&t. For people to say DT is wanting to leave out of the USA game is ridiculous  all those contracts they just got and all these new phones you think they gun let that money go. Not sure what business sense that makes! I’ll believe they want to get out of the cell phone market here the day i get a email to start looking for work!

  • derek 21

    It’s funny how this is still being covered, each day it’s something different the DOJ hasn’t been able to stop a major acquisition since Clinton’s Days and they went 1 for three lol, odds are against the gov’t not tmo and at&t. For people to say DT is wanting to leave out of the USA game is ridiculous  all those contracts they just got and all these new phones you think they gun let that money go. Not sure what business sense that makes! I’ll believe they want to get out of the cell phone market here the day i get a email to start looking for work!

  • Anonymous

    Cut off your nose to spite your face.

    • derek 21

      smh

    • derek 21

      smh

    • Wilma Flintstone

      BLIMEY!!!

  • Anonymous

    Cut off your nose to spite your face.

  • Anonymous

    Cut off your nose to spite your face.

  • Jon

    Not surprising in the least after all AT&T is good at being sly and weaseling its way out of tough spots.

  • BP

    DT is the dumbest company ever for not having a back up plan.  Now DT is forced to wait and see how this ends just like T-mobile customers.  Karma LOL!!!

  • Anonymous

    wow”’ I just got a $829.99 iPad2 for only $103.37 and my mom got a $1499.99 HDTV for only $251.92, they are both coming with USPS tomorrow. I would be an idiot to ever pay full retail prices at places like Walmart or Bestbuy. I sold a 37″ HDTV to my boss for $600 that I only paid $78.24 for.
    I use EgoWîn.com

  • Anonymous

    wow”’ I just got a $829.99 iPad2 for only $103.37 and my mom got a $1499.99 HDTV for only $251.92, they are both coming with USPS tomorrow. I would be an idiot to ever pay full retail prices at places like Walmart or Bestbuy. I sold a 37″ HDTV to my boss for $600 that I only paid $78.24 for.
    I use EgoWîn.com

  • Nearmsp

    Guys, if you read the agreement between AT&T and DT, the deadline for the deal is set for September 2012. AT&T has already paid $11.6 million so far to over 70 congressmen. They will just flood our politicians with money and buy the political hacks on FCC and pressure the Justice department for a deal. Do not under estimate the power of dirty money. It is for no reason that in the last decade the corruption index for US has steadily increased. Since 2010 US is not even in the list of top 20 least corrupt countries as per Transparency International. Countries such as Hong kong, Barbadoss, Singapore etc are less corrupt than the US.

  • Nearmsp

    Guys, if you read the agreement between AT&T and DT, the deadline for the deal is set for September 2012. AT&T has already paid $11.6 million so far to over 70 congressmen. They will just flood our politicians with money and buy the political hacks on FCC and pressure the Justice department for a deal. Do not under estimate the power of dirty money. It is for no reason that in the last decade the corruption index for US has steadily increased. Since 2010 US is not even in the list of top 20 least corrupt countries as per Transparency International. Countries such as Hong kong, Barbadoss, Singapore etc are less corrupt than the US.

  • http://twitter.com/mahmoud824 Mahmoud Shaaban

    But if a Judge requested that they pay they will but maybe that why At&t picked a early date so it doesn’t pass a certain date. the best thing about it is At&t can’t lobby a judge.

    • derek 21

      why you can’t lobby a judge lol this is america man

      • Auser72

        lol@derek, was thinking the same thing. You have had common criminals lobby (payoff) judges.

        • derek 21

          yeah auser the last time i was in middle school i learned the president and senate only confirms the supreme court judges but i might be wrong been a few years lol

        • Anonymous

          All federal district and appellate judges are nominated by the President and confirmed by the Senate.

        • Anonymous

          All federal district and appellate judges are nominated by the President and confirmed by the Senate.

        • derek 21

          yeah auser the last time i was in middle school i learned the president and senate only confirms the supreme court judges but i might be wrong been a few years lol

      • Auser72

        lol@derek, was thinking the same thing. You have had common criminals lobby (payoff) judges.

      • http://twitter.com/mahmoud824 Mahmoud Shaaban

        I mean its illegal to lobby a judge but its legal to lobby a politician/

    • derek 21

      why you can’t lobby a judge lol this is america man

    • derek 21

      they gotta get paid and re-elected just like politicians do

    • derek 21

      they gotta get paid and re-elected just like politicians do

  • Anonymous

    DT is a piece of work.  First they take ATT’s bids, which made Tmo USA lose tuns of customers.  Then That Bum Humm tells us to keep our head up while he screws us out of our job.  Now that the deal wont go through, we might not get a damn thing for all our trouble.  Thanks DT, you are amazing. You couldnt manage to make water go through a drinking straw.  You screwed Tmo USA a long time ago and you still are while trying to get rid of it.

  • jon

    This article is a gawd-aweful mess. You’re trying to report on clause in a contract, which you don’t even know if it exist because you haven’t seen it. And if it does exist, you don’t know the date with which that 6 billion comes into play. Also, you’re trying to tie the value level threshold to something completely unrelated. T-Mobiles value doesn’t drop from PROPOSED asset cuts. And those cuts would only happen if the merger were approved. What the hell kind of reporting is this???

    • BP

      This article is only a reflection of the mess that DT is in.

  • jon

    This article is a gawd-aweful mess. You’re trying to report on clause in a contract, which you don’t even know if it exist because you haven’t seen it. And if it does exist, you don’t know the date with which that 6 billion comes into play. Also, you’re trying to tie the value level threshold to something completely unrelated. T-Mobiles value doesn’t drop from PROPOSED asset cuts. And those cuts would only happen if the merger were approved. What the hell kind of reporting is this???

  • J. Williams

    Wow, amazing…all this for nothing lol. Oh well, that’s life. Its a Bitch, then you die.

  • J. Williams

    Wow, amazing…all this for nothing lol. Oh well, that’s life. Its a Bitch, then you die.

  • macman37

    Just goes to show everyone how pathetic and corrupt AT&T is if they gotta work to increase their future 4G LTE network when they can’t take the easy way out.  This also shows us just scared they are of the iPhone becoming available to more carriers; they’re cryng, “Make sure we’re ready for this big defection to the other better carriers!”

  • BigMixxx

    This is becoming weirder.  In the past, acquisitions have been “ok, it does not look good for the competition and business enviornments, divest.”  This divestiture SO  devaluates the price of the purchase….AT&T shareholders may end up voting no themselves.  I know for a fact I would and the proxy vote will send that down the drain quite fast.  

    If it breaks it up where it makes sense, fine.  BUT there is A WHOLE LOT of overlap in T-mobile and AT&T markets.  Something else ain’t adding up now…..

    Now the numbers are not adding up….

  • Moe

    What a f’ing mess. So let’s review: ATT wants to buy TMO. The deal requires TMO to maintain an asset level. TMO aggressively markets against ATT. TMO pisses of so many companies that it is losing market share. TMO wrecks it’s once top of the rock customer service and loses market share. TMO makes a decision to play with it’s rate plan, make data services mandatory. TMO loses market share. DOJ steps up and says no to the deal. TMO loses market share. TMO staff are fired and customer care center downsized, closed and contracted off shore. TMO loses market share. So now DT may lose out on the deal, the money if the deal falls through and has f’ed up it’s potential remain a player in the gsm market place. The future of TMO is so uncertain at this point more of the market is going south. Wow does DT know how badly they screwed up? No deal and not much left to try to make another deal happen. Everyone loses. Way to go.

    • Anonymous

      I want to still see what’s up in their sleeves if DOJ still do not approve this deal. Since T-Mobile is almost rock bottom (or they already are), what else is DT trying to do to fulfill the deal to be approve.
      Things are getting worse for T-Mobile.

    • Anonymous

      I want to still see what’s up in their sleeves if DOJ still do not approve this deal. Since T-Mobile is almost rock bottom (or they already are), what else is DT trying to do to fulfill the deal to be approve.
      Things are getting worse for T-Mobile.

  • AnotherVoiceOfreason

    DT is in a financial mess of their own in Europe and are desperately seeking this $39 billion deal to pay down their own debt.  They are done with T-Mobile USA guys.  Done.

    We have to get past the point of “wishing to keep T-Mobile out of the reach of a suitor,” as it is today. They are done with us so it’s time we move on to. 

    Although I don’t want to necessarily become an AT&T customer we would be worse off alone with no hope of any substantial LTE network for the foreseeable future.  And without DT as our parent company we will miss out on all upcoming hot handset launches here in the US with our not as common AWS spectrum. T-Mo USA alone will not have enough financial pull or size to demand the iP5 or the alike.  

    The longer we stay in limbo the worse off our wireless carrier and network will be.  No more investments and we’ll see the likes of AT&T, Verizon and even Sprint pass us on by with their LTE deployments as this will be the new defacto wireless broadband technology of choice going forward here in the US. 

    If the only reason you are with T-Mobile is because you have some old $5.99 data plan then you are here for the wrong reasons.  You belong with Metro PCS or Boost since it’s obvious your only reason you are a wireless customer is because of price not value.  I’d rather pay a little more if I can get LTE and win coverage in much more places than I do today.