There may be a silver lining in the DOJ’s plans to stop AT&T’s $39 billion takeover of T-Mobile USA — at least as it relates to T-Mobile. If regulators stop the merger, AT&T still will likely have to pay a multi-billion dollar “break-up fee.” The news follows a report by Reuters — citing an unnamed source — which indicated that the $6 billion break-up fee might not apply if regulators torpedo the deal. accord
“There are a number of options under which the contract will not come into effect,” the source told Reuters.
But PC Magazine, which looked at an AT&T SEC filing from March related to the merger, said that the giant wireless carrier still might have to pay as much as $3 billion even if regulators kill the deal.
The filing notes:
“The Stock Purchase Agreement contains certain termination rights for each of the Company [AT&T] and Deutsche Telekom and, in the event that the Stock Purchase Agreement is terminated because of the failure to obtain regulatory approval, the Company may become obligated to pay Deutsche Telekom $3 billion in cash, enter into a roaming agreement with Deutsche Telekom on terms favorable to both parties and transfer to Deutsche Telekom certain wireless AWS spectrum that the Company does not need for its initial LTE roll-out.”
Meanwhile, a spokesman for Deutsch Telekom, which owns T-Mobile USA, said that the Reuters’ report missed the mark and that the company would be entitled to a break-up fee even if regulators are responsible for the deal’s demise.
Of course, AT&T doesn’t want the deal to die, and would much rather bring the Bellevue wireless carrier into its fold. Last week, the DOJ filed a lawsuit trying to block the deal, arguing that it would harm consumers and hurt competition.
Previously on GeekWire: “How Carly screwed up AT&T’s $39B T-Mobile acquisition”