updated 04:55 pm EDT, Fri May 13, 2011
AT&T to give Deutsche Telekom $6b if deal fails
Deutsche Telekom, the parent company of T-Mobile USA, has confirmed that if the $39 billion deal with AT&T isn't approved by regulators, AT&T will give the German provider $6 billion in cash and benefits, it was reported on Friday. Back in March, this breakup fee was a smaller $3 billion in cash. The remaining $3 billion is from an estimated value of spectrum and a national roaming agreement, said a Deutsche Telekom spokesperson.
Those close to the matter said the spectrum accounts for $2 billion while the roaming agreement makes up the remaining $1 billion. The German provider's CEO, Rene Obermann, said on Thursday he believed the transaction will be finalized in the first half of 2012.
Before it goes through, however, the deal needs approval in the US from the FCC and the Department of Justice.
The $6 billion ensures T-Mobile could start an LTE network on its own. The carrier said it couldn't implement LTE-based 4G because it didn't have the frequency needed for the performance it wanted.