Deutsche Telekom confirms $6 billion prenuptial agreement with AT&T

By on May 13, 2011 at 4:29 PM
mobile May 13, 2011

It’s more like a pre-prenuptial agreement, but you get the idea. T-Mobile’s parent company, Deutsche Telecom, has confirmed that it stands to receive a $6 billion settlement from AT&T should the companies’ proposed merger fall through. According to DT, a $3 billion cash payment would be made along with additional spectrum and a national roaming agreement. While the exact valuation of the spectrum and roaming agreement was not disclosed, Reuters appraises the two intangibles at close to $3 billion. Congress, the Federal Communications Commission and Department of Justice are all scrutinizing the proposed deal, which would make AT&T the largest wireless provider in the United States. There are sure to be plenty of twists and turns along the way, but once thing is certain: a large sum of money is going to be debited from AT&T’s coffers no matter the regulatory outcome.

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  • http://twitter.com/bugabuga Max Smolev

     Pretty clever from AT&T’s part — like an insurance policy. If it can’t get outright approval it can beg for “conditional” approval with some flimsy tiny strings attached “or you’ll be imperiling one of the major players in industry!!!” Will see it it works. Frankly I wish T-Mobile’d merge from Sprint instead. Both are a bit cheaper than ATT/Verizon

    • Anonymous

      did i miss something? or do you have it backwards?
       

    • Anonymous

       If cheap worked, T-mobile wouldn’t be in this situation. 

      I like AT&T.  I like TMO.  I personally have never had an issue with AT&T customer service (and I had to deal with them today, so it’s fresh).  I just activated a phone on TMO a couple days ago, and it went well.  You combine those two networks together, TMO customers get an instant bump in coverage, and AT&T gets extra speed/coverage in some markets.  TMO/Sprint never made sense unless sprint wanted to move away from CDMA/WiMax. 

      Whatever… should be an interesting fight.

      • Anonymous

        Finally someone sane speaks. Ahhhh.

      • http://twitter.com/bugabuga Max Smolev

        I think cheap worked. Except T-Mobile has been gradually increasing prices and narrowing choices, chasing ARPU instead of number of subscribers. They still are cheaper than AT&T.

        Never had an issue with either AT&T nor T-Mobile’s customer service (T-Mo had capacity issues in my area)

        For Sprint merger I hoped that combined entity would eventually switch to LTE :) There are already phones that do both CDMA and GSM, so you’d have roaming between Sprint+Verizon and T-Mobile+AT&T – essentially all major providers in one

    • Michale11111

      You’ve got it wrong MAX. AT&T pays T-Mobile if it doesn’t go through not the other way around.

      • http://twitter.com/bugabuga Max Smolev

        Maybe I didn’t express myself well.
        AT&T will present this fact as one of the major reasons to approve the merger.

        Because if merger is NOT approved, they will be out of almost just as much money as if they were to merge, and get none of the benefits. And all the money/assets goes to German partner

        So the regulators are presented with a choice of:
        - approve merger unconditionally – AT&T buys T-Mobile (highly unlikely)
        - disapprove and cause AT&T to loose $6B and gain nothing in return (also unlikely, there will be tons of politicians howling that “because of overly-stringent regulation you stripped US business of $6B that goes to Germany)
        - approve conditionally – sell this and that, add cheaper plans, do something else, but AT&T still gets to buy T-Mobile – this is most likely scenario, the question is how many conditions there will be.

      • Anonymous

        Any time a wireless company buys another they have to sell off some of the over lapping assets. Think vzw buying altell

  • Michale11111

    Who makes a deal like this unless they know they will never have to pay off? You can bet your bottom dollar that AT&T lobbyists and campaign contributions have locked up the deal already. Their will be a meaningless show for the benefit of the public so congressmen (all of whom are inherently criminals by the nature of they system they voluntarily participate in) can claim they tried to do what  was best for the “people” when in fact, they traded away their power to do so for legal bribes a long time ago. Don’t worry AT&T, your $6 Billion is safe!

  • http://about.me/brandonmccall brandonmccall

    I personally hope the merger doesn’t get approved. AT&T could simply spend that $39 Billion on improving their service, and T-Mobile could put that $6 Billion toward improving theirs.

    • Anonymous

      Problem is that the money would go to DT, not T-mo. 

      The spectrum thing is interesting.  I’d think that the US regulators would be wary of allowing $3B of spectrum being owned by a foreign company.  

      • http://about.me/brandonmccall brandonmccall

        You present two very valid points.

      • Anonymous

        I think the spectrum thing is a non-issue as far as the government is concerned.  T-Mobile already owns more then that. Att has played a band hand of poker and now wants someone to bail them out. On paper, this merger should not be allowed. It will undoubtedly be bad for consumers and lead to more data caps and more restrictive policies. (att is only company who hasn’t approved the sharing services on blackberry playbook).  Its all about money and the huge profit they announced last quarter is not enough. 

        It’ll be interesting to see how this plays out. Real interesting.
         

      • Anonymous

        Its 2 billion but yeah its not a chinese company so they would be ok with it

  • Dvintin69

    At&t sucks. Already left T-Mobile and I am much happier. Hope both at&t and Tmobile go under.

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