Ina Fried

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What ATT Owes T-Mobile if Deal Doesn’t Go Through

If regulators squelch AT&T’s $39 billion bid to buy T-Mobile, the company will have more than just its frustrations to deal with.

As part of the deal, AT&T has agreed to pay T-Mobile $3 billion and promised valuable spectrum and a roaming agreement should the deal fail to garner approval.

“In the event the transaction does not receive regulatory approval satisfactory to AT&T and the transaction does not close, AT&T will be required to pay a breakup fee of $3 (billion), transfer to T-Mobile certain AWS spectrum that is not needed by AT&T for its initial LTE roll out, and provide a roaming agreement to T-Mobile on terms favorable to both parties,” the company said in a fact sheet posted on Sunday.

AT&T has said it thinks the deal should pass muster.

“Today when you look across the top 20 markets in the country, 18 of those markets have five or more competitors, and when you look across the entire country, the majority of the country’s markets have five or more competitors,” AT&T President and mobile unit CEO Ralph De La Vega told Mobilized on Sunday. “I think if the criteria that has been used in the past is used against this merger, I think the appropriate authorities will find there will still be plenty of competition left.”

However, not everyone is so convinced. Democratic Senator Jay Rockefeller of West Virginia on Sunday urged regulators to “leave no stone unturned” in their examination of the proposed merger.

“With every passing day, wireless services are becoming more and more important to the way we communicate,” Rockefeller said in a statement. “So it is absolutely essential that both the Department of Justice and the FCC leave no stone unturned in determining what the impact of this combination is on the American people.”

There are also some other interesting financial details in the deal. For example, AT&T has the right to increase the cash versus stock part of the deal by up to $4.2 billion. There is also a collar on the AT&T stock price used to determine that part of the deal, meaning that no matter what happens to the stock, the price of AT&T shares used to calculate the deal won’t be less than $26.0165 per share and no more than $30.2354.

The company also lays out its views on other deal-related matters in this question-and-answer document.

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