AT&T will lose $6 billion if T-Mobile acquisition fails

By on May 13, 2011, 1:30 PM

AT&T says it is still on track to have its acquisition of T-Mobile approved by March 2012. Resistance to the merger has been growing in recent weeks, but the company insists everything is going smoothly. AT&T General Counsel Wayne Watts said the company has provided a second round of information requested by the Justice Department and that meetings with the Federal Communications Commission (FCC) are also going as scheduled.

"The number one question I get from investors is can we get (the deal) done," Watt recently told reporters according to The Washington Post. "I think we can." Watts also said that the regulators' review of the deal thus far had been thorough, fact-based, and "exactly as we expected."

AT&T has reportedly promised to give Deutsche Telekom $6 billion in assets, services, and cash as a break-up fee if US regulators reject the deal. The $6 billion would include $3 billion of cash, about $2 billion worth of spectrum, and a roaming agreement valued at $1 billion.

Three months ago, AT&T announced that it had entered into a definitive agreement to acquire T-Mobile from Deutsche Telekom in a cash-and-stock transaction valued at approximately $39 billion. The acquisition of T-Mobile, the fourth largest carrier in the US, would enable AT&T, currently the second largest US mobile service, to leapfrog the leader of the US market, Verizon Wireless, a venture of Verizon Communications and Vodafone Group.

Furthermore, AT&T and Verizon Wireless would hold 79 percent of the US market if regulators approved the deal, leaving Sprint Nextel as an even weaker number three player in the US. Unsurprisingly, Sprint is doing everything in its power to appeal the huge deal.

User Comments: 5

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howzz1854 said:

please don't

Guest said:

I have been with T-Mobile for more than ten years... Shooosh, AT&T. Shoosh.

If AT&T's own fault if they lost $6 billion. Regulators ought not take this into consideration during the approval process, for it will only encourage this form of threatening tactic in the future.

Relic Relic, TechSpot Chancellor, said:

Don't forget they will be a GSM monopoly if this deal goes through, not to mention the major privacy issues. Public Knowledge President Gigi B. Sohn summed it up nicely that this deal is all around bad and we can only hope it doesn't go through.

Guest said:

The very day this deal goes through, i'm off to Sprint.

yeah, perhaps the quality is not TOP notch, but it is not bad. Furthermore, as this deal gets closer and closer to fruition, you will see Sprint and other providers extending amazing deals to new customers - I will be there, I will be that customer /end ;)

pmshah said:

I was in US last June/July and checked out some offerings from T-Mobile. If the footprint of their service is not a constraint they have the best deals on offer.

I could simply buy a sim from them, stick it into any of my Indian GSM mobiles and get it to work. They also had the the best -read lowest cost - packages for basic communication operations - telephone and sms.

It would be a real shame if the deal goes through. It would also mean the Regulators are definitely not doing their job.

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