AT&T and T-Mobile USA announced the end of their proposed merger on Monday. The opposition raised by the United States government, rival carriers and advocacy groups proved too much for the two companies to push through. As a result of the failed deal, AT&T has to give T-Mobile parent company Deutsche Telekom $3 billion in cash and $1 billion in Advanced Wireless Solutions spectrum. AT&T also mentioned a “mutually beneficial” roaming agreement yesterday which we now know will last seven years.
The UMTS roaming agreement will allow T-Mobile USA to extend its reach from 230 million potential customers to 280 million customers. In other words, T-Mobile service will be lit up in areas in which it doesn’t currently exist.
The AWS spectrum T-Mobile USA will receive will extend to 128 markets. Deutsche Telekom pointed out those markets also happen to contain 12 of the top markets in the country including Denver, Houston, San Francisco, Los Angeles and Dallas.
The $3 billion in cash Deutsche Telekom is getting probably won’t go to T-Mobile USA for network building purposes. Deutsche Telekom says the money “directly reduces Deutsche Telekom’s net debt, thereby by strengthening the financial performance indicators affecting the company’s rating.”