AT&T To Pay T-Mobile $6 Billion If Deal Isn’t Approved

According to the old “people familiar with the matter” story AT&T will have to pay Deutsche Telekom $6 billion in assets, cash and services if a deal isn’t approved by US regulators. The $6 billion would break down into the $3 billion in cash previously thought but an additional $2 billion worth of spectrum and a roaming agreement valued at $1 billion would also be picked up by Deutsche Telekom. The sources asked not to be named as those details were not public.

The cash break-up fee is approximately 7.7% of the total value of the deal and with the inclusion of the assets and services AT&T could stand to lose up to 15.4% of the total value of the deal. The high fee alludes to the high level of confidence that AT&T has it can convince regulars to approve the deal. After yesterday’s showing at the Senate Hearing both AT&T and T-Mobile have their work cut out for them to convince regulators this deal is in the best interest of the industry and consumers.

Reuters via BGR

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  • As an employee I’d love to see the deal not get approved even more now. More money coming into the company without the stress of having to sell At&t.

  • NOW I know that the merger NOT being approved would be best. SAY NO TO ATT!

  • Drifter702

    Dr. Evil: “Why have 39 Billion, while i can have 6 Billion”

  • AT&T will bribe government officials with a few billion, they have this deal.

  • I had enough of this acquisition thing. ….

    • It’s definite overload but its a T-Mobile site and we have to cover T-Mobile news. I can’t be selective on which articles to write about.

    • Todd_the_Hunn

      Baby its going to be going on for over year . Wait till Xmas .

  • Todd_the_Hunn

    If this Merger passes expect to see everyone voting in favor on the FCC to be working for AT&T days after the vote . They won’t even have to leave DC .

  • Anonymous

    The ideal situation would be to have a large non-telco company like google buy to tmo and let it continie to run as an independent company…..that means no jobs lost and maybe just maybe tmo would be run properly. It would be strange if google bought tmo usa. What would that mean for Android? One can only dream………sigh

  • craigers

    This is the only reason I think DT may keep T-Mobile around if the deal isn’t approved. They stand to get significant assets to help move T-Mobile move up. If they get this 6 billion and the iPhone 5 it could be a significant boost to T-Mobile and DT.

  • Please let them fall flat on their faces on how cocky they are just because “they have the money”, but they could not back it up at the Senate hearing yesterday. They repeated the same ole bull they been saying all along with no other further statements or valid counter arguments to the questions & “fact” raised by everyone else. AT&T got punched every which way & didn’t know what way to turn at that hearing.

  • Wish I could say I could believe in the government/FCC to do something fair here, but history has shown otherwise. I have some mild hope, but it’s tame and slowly being dwindled. Especially when you read stuff like this:

    “Regulator to join Comcast after OK of NBC deal”

  • Anonymous

    I REALLY REALLY hope this deal doesnt happen…. T-mo will use the Billions to up the anty and who knows… maybe Google will get busy and buy them…. I mean T-mo was the FIRST android phone so you know there is some love there… I remember a while back seeing a comment from someone at google expressing how much they wanted a wireless company but didnt want to start from scratch… WELL GOOGLE… Here is your shot… forget about trying to match or beat facebook, and lets get rolling with wireless co…

  • Hamster

    Having the benefit of a roaming agreement with AT&T and additional owned spectrum would make Tmo even more attractive to Sprint as well, probably. The roaming agreement and spectrum might make it easier for Sprint to run the parallel incompatible networks while they transition customers to WiMAX (or, more hopefully, LTE if they decide to make that switch)

  • Anonymous

    This is precisely what should happen. DT should then use this cash and extra spectrum to secure their position in the US, by extending the network, and getting better contracts with handset manufacturers to get the handset people WANT. To put themselves at the forefront. Not always the “also carries”.

  • Anonymous

    i really want a dose of the denial pill everyone’s taking. do you think blue would risk this kind of money and delay of their build out if they hadnt made calls to their friends in washington before making the announcement? This is a multi-billion dollar deal that could hurt both companies financially and competitively if they didnt think the deal would go through. Their lobbying budget is almost as big if not bigger than our build out budget so I’m pretty sure all you saw yesterday was grandstanding by the politicians…and nothing more.

    • Mopar6464

      We have a winner.

    • Anonymous

      yep, this is the primary reason why this deal will go through. AT&T is basically saying they’re willing to spend $6 billion or more to make it happen whether it be in lobbying or minimal divestments to appease the government. They have a whole year to play this game…..

    • Davidmiddljr

      agreed, a politician is a snake by any other name. i wonder how many of these senators will be taking an ATT-mobile board job once this is done.

      • Anonymous

        LOL the ones that raised the biggest stink @ the hearing gets more money contributed to their “re-election” fund or some donation to the state of said elected official

  • Anonymous

    I really hope DT plan’s on continuing to invest in US if they “lose out” on this deal. If not, we’re just waiting until the next time this happens.

  • Davidmiddljr

    They will sell regardless of the outcome. If it doesn’t happen, they will just walk away with money to dump into Europe, then still sell out here. Its clear they don’t want to be in this market, and we can’t force them. It will be sold regardless, just wish it wasn’t a crappy provider they were selling out to. But, who else is there with the capital to buy and succeed inside this market?

  • Truth3008

    If this deal doesn’t go thru and DT gets money, roaming agreement and spectrum it could help. Also in the news Intel is selling its shares in Clearwire. Its funny how things are slowly popping up and if Intel does sell, this could be a good investment for DT to buy the Clear shares, upgrade their spectrum to LTE and now T-Moble has a 4G technology. Clear made it known all it will it take is a software upgrade because their hardware would support LTE.

  • Luisjimenez1980

    yes that’s great i hope this deal never gets approved by usoj and fcc because att bills may come fat next x-mas time, i being with tmobile for 6 yrs and i will go to sprint or boostmobilw if this goes thru

  • Drmaestre84

    Am I the only one that thinks TMobile is smart for putting on a facade of wanting to sell Tmo USA? I think that Tmo may know more than we give them credit for .It stands to know that all wireless carriers would know all about the anti-trust laws, competition agreements, etc. and would at least review that info before even thinking about striking a deal, especially when money is at stake. For some strange reason I think Tmo doesn’t want to sell out because other than the money, what would they have to gain by acquiring roaming agreements with AT&T and spectrum here in the US if they were so desperate to sell?

    • Anonymous

       No you are not the only one.  I won’t say more, because I highly believe the Att execs read this blog to gauge events.

    •  Research Phillip Hume and see what he does for DT. He is the hangman. He ain’t here to make nice.

  • This is old news…we’ve all known this since the initial announcement.

    • Anonymous

      sort of.  Nobody put a value on the spectrum and the roaming agreement in the earlier articles. 

      It’s mostly the same, but the $6 billion dollars just adds some perspective on how much AT&T is willing to fight to make this merger happen. It’s a staggering number.

  • RandoMan

    If I had to guess at the big picture, I would say that DT is holding out hope that the deal falls through so they pick up a cool 5b and some extra spectrum. I think it figures at just about enough green to convince a lender to give them 33.5b +/- for “expansion” and enough spectrum for some 37-40million more subscribers… Any ideas why they would want that?

  • 4G_or_not_4G

     I hope the regulators are like me, because I ain’t convinced!

  • TMoFan

    I’d like to think that if this takeover doesn’t go through DT would have a change of heart and use the cash and spectrum to build up T-Mobile like they should and create a force to be reckoned with, but they seem pretty hellbent on getting rid of T-Mobile no matter what so they would take the money and still sell out, maybe to Sprint. Better yet Rogers or Orange would snatch it up to get into the American market.

    This shows that at&t is pretty confident in getting this thing through. Let’s keep the pressure up.

  • Miro

     All the more reason those of us ‘against’ the merger need to make some noise

  • World of Wireless – WOW!

    As a cell phone store owner since 1987 currently selling T-Mobile since Aerial Communications launch and metroPCS since lauch, I have been through many mergers and name changes and they always turn out to be a disaster for everyone including myself. I sold AT&T since it started out as Cellular One for 15 years and went through quite a few name changes and mergers but was terminated a few years back when they only wanted exclusive stores. My old customers on Cingular would come in and want a new phone and they would have to switch to a AT&T Wireless Phone and Sim and pick a new plan, even if their plan was better, otherwise they were stuck with their old handset and could only purchase a Cingular handset out there on eBay or Craigs list if they wanted to keep their plan. What a mess it was. The same thing will happen if this merger goes through, so if a former T-Mobile customer wants an iPhone, for example, they will have to get a new plan with a high price and they will lose their great T-Mobile plan. Back a few years ago, I also had Verizon Wireless. Then it happened with them which we sold after it started as PrimeCo in the Tampa market, so after 12 years they terminated everyone non-exclusive too and customers hated it since PrimeCo was a very low cost provider. I believe it was 1997 that the wireless market expanded to allow multiple carriers and really helped lower wireless bills and make it very competitive. I sure hope the goverment blocks this because I really see the industry falling back into pre-1997 with only 2 carriers and I will also probably lose AT&T since they only have exclusive stores unless I gave up metroPCS which I would never do. Sprint will eventually get bought out as will metroPCS, and all the other small carriers out there. So what then? Can the government open up more spectrum and sell billions of dollars in licenses again and it start all over again or are we stuck with 2 carriers forever?? Probably.

    • Anonymous

      Excellent post.  People should realize that this is precisely why gas prices are so high, lack of competition.

      All the oil companies merged (e.g., Chevron Texaco, Atlantic Richfield) and that eliminated competition. How so?

      Have you ever noticed that there’s never a price war on fuel.  Why do you think that is.  It’s because the oil companies agreed not to compete with each other on the price consumers pay (thereby assuring that they all will share in the profits).

      End result: Gas prices go up across the board and we suffer.

      The same thing is going to happen with wireless.

    • Mopar6464

      “So if a former T-Mobile customer wants an iPhone, for example, they will
      have to get a new plan with a high price and they will lose their great
      T-Mobile plan”.

      Not if you buy that iphone OFF contract. Then AT&T can’t change your original T-Mobile rate plan because your not signing for something new with them.

      • John Leon

        AT&T keeps changing the rules after a merger.  After 2 years of buying Dobson Cellular One, AT&T
        announced that they were shutting off the remaining Dobson handsets with Dobson SIM cards.  If
        you wanted to continue service you had get a new AT&T SIM card and go with one of their higher
        priced plans. 

        I didn’t like their proposal and wanted to keep my phone number so I just ported it to a Tracfone.

      • World of Wireless – WOW!

        You are correct. Then you have to jailbreak and unlock it, which is not a big deal unless it’s a certain iPhone 4,and then you have to purchase a sim puncher since they use a micro sim (if it’s the iPhone 4 and future 5) and you only will ever get 2g EDGE since T-Mobile can only support this with the iPhone in the USA. I unlock them all the time and put them on T-Mobile for customers but now I push the Androids since I believe they are a much better product.

      • Guest-O-Matic

        Nah, AT&T has this really cool thing going on that even if you buy a phone off contract for full retail and try to use it on their network it will automatically switch your plan to one that works with that phone and change your contract if necessary.

        I bought an iPhone for one of my business lines and within 30 minutes of putting my SIM into it I got a text saying my airtime and data plans had been switched to an iPhone plan… It was the coolest thing that has ever happened. Needles to say within 5 minutes of that message I was back on the original phone and the iPhone was returned.

  • Aaron1322

    Enough said. This deal will happen. Congress is run by industry. Just grab any standard United States History textbook.


     roaming agreements and spectrum if the deal fails?

    where do i buy voodoo dolls and poisoned pins?

    i want a dozen dolls and a gross of pins.

  • Anonymous

  • Druckenmillert

    I just waited eagerly for over a year to get rid of my rip-off crappy service Centennial wireless contract so I could go T-Mobile pre-paid. The ATT buy out of Centennial was a nightmare. They would not even work with me at all to get mer a reasonable contract at all. I was not going to fork out more money for a crappier contract.
         I will NOT have ATT again. Why would you sell yourselves to one of the worst service. Once I even had an ATT employee tell me that ATT wqas a rip-off. That’s lame. Do not allow ATT to become another monopoly.