AT&T, T-Mobile breakup fee has restrictions

It is a well-known fact that AT&T is obligated to pay Deutsche Telekom $3 billion in cash and $3 billion other assets if the merger between AT&T and T-Mobile USA does not get approved. Approval of the deal has taken a couple hits lately with the United States Department of Justice filing an antitrust lawsuit to block the merger. The former chairman of the FCC also said AT&T stands no chance in getting the merger approved. It turns out that even if the merger is denied, AT&T may not necessarily have to give Deutsche Telekom anything at all.

A knowledgeable source told Reuters there are a couple conditions that must be met in order for AT&T to be obligated to pay the breakup fee. The first condition requires the merger to be completed within a specific period of time. When that timeframe ends was not mentioned. The second condition requires T-Mobile USA to have a minimum unnamed value. If for any reason T-Mobile USA has to be broken up in order to facilitate the deal, the core of T-Mobile USA must still maintain that minimum value.

Philipp Kornstaedt, a spokesman for Deutsche Telekom said the company will break T-Mobile USA into separate parts if that’s what’s needed for the deal to go through.

Read [Reuters] Also Read [Bloomberg]