updated 05:33 pm EDT, Sat May 10, 2014
Deutsche Telekom seeking $1 billion golden parachute, exec safety
Like the toll paid by AT&T following its unsuccessful bid to purchase T-Mobile, majority shareholder Deutsche Telekom is seeking a breakup fee of $1 billion if the proposed merger with Sprint falls apart for whatever reason. Additionally, as part of the merger talks, the German parent company is demanding that some of T-Mobile's management executives not be ousted following a merger.
"In the US, we're getting signals from regulators as well as antitrust authorities that a merger isn't perceived as expedient," Deutsche Telekom Chief Executive Timotheus Hottges said during a first quarter earnings conference call. "Against that background, we have to see how we can best develop the business with the most value for our shareholders."
Sprint has been formulating a position to convince the Federal Communications Commission and the Department of Justice that the merger would not harm the US wireless industry. Regulators have historically denied large-scale acquisitions in the wireless industry -- this deal, if completed, would see the third- and fourth-largest carriers combine. A deal to merge the two companies is expected to be floated during the early summer.
"To really create value in the market, at the highest speed, with a better network, with even more spectrum -- a combination, for instance, with one of the players would make a lot of sense, to create a super-maverick against AT&T," Hottges said.
Sprint and parent company SoftBank want to make the offer while US regulatory boards are concerned with the Comcast purchase of Time Warner Cable. Any deal would require approval by the boards of directors of all four companies involved in the deal -- Sprint parent company SoftBank, T-Mobile parent company Deutsche Telekom, plus the Sprint and T-Mobile boards themselves. The demands by Deutsche Telekom seek to alleviate disruption to the company should the effort fail.