Report: AT&T $6B In The Hole If T-Mobile Deal Fails
AT&T better hope the FCC allows it to acquire T-Mobile, because if it doesn't, one report says it will be $6 billion poorer.
The report, from newswire service Reuters, cites anonymous sources and says AT&T has promised to give T-Mobile's current parent company, Deutsche Telekom, $6 billion in assets, services and cash as a break-up fee if the deal falls through. This $6 billion would include $3 billion in cash, $2 billion in spectrum and a roaming agreement of $1 billion.
The total price of the deal between AT&T and Deutsche Telekom over T-Mobile is $39 billion. It also included an eight percent equity stake for Deutsche Telekom in AT&T, and a seat on the board of directors.
However, since the announcement, the deal has faced antitrust accusations from competitors and an uphill battle for approval by the FCC as well as the Department of Justice. Politicians have also taken aim at the two companies.
This deal will leave us with just three national companies, two of whom - AT&T and Verizon - will control nearly 80% of the market. And there are real fears that the third - Sprint - will itself be sold to one of the big two and we will end up with a cell phone duopoly. An industry that once was a monopoly owned by AT&T in the last century is in danger of reverting to a duopoly in this new century, Wisconsin Senator Herb Kohl said in a statement,
Despite all of its hurdles, AT&T and T-Mobile are hoping the deal is finished by some point next year. If the deal doesn't get done, it will be $6 billion in the hole for absolutely nothing.
Reuters reported the high value is proof AT&T is confident the deal will get done. The break-up fee of assets is 15.4 percent, which is the highest ever recorded according to Thomson Reuters Data.
Follow Gabriel Perna on Twitter at @GabrielSPerna
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