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T-Mobile Wants $1B Break-Up Fee If Sprint Deal Fails

May 10, 2014, 9:14 AM by Eric M. Zeman

T-Mobile and Sprint are weighing several big factors ahead of a potential merger between the two. To start, Deutsche Telekom, a two-thirds owner of T-Mobile, is demanding a break-up fee of at least $1 billion if the merger is shot down by U.S. regulators. Deutsche Telekom scored an important break-up fee with AT&T that ended up giving the smaller operator cash, spectrum, and roaming agreements - all of which have helped it reinvigorate its business. Second, Deutsche Telekom wants top T-Mobile executives to remain in place during and after any sort of regulatory review, and it wants the T-Mobile brand to remain in place. This means the company would prefer to see T-Mobile CEO John Legere head the combined company rather than Sprint CEO Dan Hesse. The companies have not yet agreed to these terms, according to sources cited by The Wall Street Journal. Further, Sprint and T-Mobile are waiting for several outside developments to proceed. For example, the Federal Communications Commission is set to vote on the spectrum screen during its May 15 meeting. If the FCC puts its proposed changes in place - which would add Sprint's 2.5GHz spectrum holdings to the screen - it could impact whether or not T-Mobile and Sprint move forward at all. The two companies may also wait to see how the 2015 spectrum auction shakes out, or wait until there's a new administration overseeing the FCC and U.S. Department of Justice. Regulatory bodies have already indicated they prefer to see four national carriers, rather than three. T-Mobile and Sprint are attempting to work around those concerns.

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This forum is closed.

JJinNYC

May 10, 2014, 12:20 PM

Good strategy T-Mo!

T-Mo could use that $1B for the upcoming 600MHz auction cause you know Sprint-T-Mo ain't happening 🤣 🤣 🤣

DarkStar

Yeah without Sprint t-mobile will probably go out of business.

...

Slammer

I have some news for you. T-mobile is going to need far more than just a billion dollars to parlay up for the 600Mhz spectrum. With this spectrum will come an astronomical amount of responsibility to utilize it nationwide. Not just metropolitan areas....
(continues)

Slammer

May 10, 2014, 3:29 PM
edited

It Seems Tmobile...

... wants to be the industry prostitute rather than actually be owned. Why merge if you can bank on using everyone?

This whole idea of breakup fees is a joke. Even though I fought the AT&T/Tmobile buy, I didn't see the logic in the break up fee. They were never together to break up. Same here. Sprint and T-Mobile are not yet an item. Tmobile needs to keep its pants on and start acting like a serious wirless carrier. All its whoring around has done nothing to hurt AT&T or Verizon. And even as far as not hurting Sprint. All Tmobile has done, is get horizontal with the cheapest customers from the larger three. But, it is the higher paying customers that keep the companies in business. Who is going to pay for all these free things T-Mobile i...
(continues)

rwalford79

You dont understand the point.

TMobile has gained some of the low cost customers from the Big 3, but it also has given customers some great benefits that the big carriers dont want to honor, even after a merger. While these customers are not as pr...
(continues)

Jaden10

May 12, 2014, 12:40 AM

Don't see this happening

I don't see this going through for a few reasons.

1. The oversight agencies of this government don't want to risk losing competitiveness. By Sprint buying T-Mobile they will also acquire MetroPCS. So in one action they would remove two Carriers. T-Mobile being a actual carrier and MetroPCS being a MVNO owned by T-Mobile. Removing 2 competitors would limit customer options.

2. I suspect that Verizon and AT&T will start lawsuits about how this could impact customer choice.

3. Sprint is only doing this because they want more spectrum so they can build out LTE. And Sprint has a more spectrum then any other carrier in North America. Their licenses are all over the board. It is confusing and quite frankly a migraine to contemplate.

And...
(continues)

JJinNYC

Yeah I agree especially about #3. Sprint has 200Mhz of spectrum. Too bad if most of it is garbage 2.5Ghz that will take a gazillion towers to deploy it on. Sprint has more than enough spectrum. They don't need T-Mobile for that. The japs just want to ...
(continues)

danyalsumra

May 10, 2014, 10:50 AM

GSM or CDMA?

They wanna keep T-Mobile name. And keep T-Mobile CEO. Will the sprint network get converted to GSM or will T-Mobile convert to CDMA.

I rather have them be GSM. CDMA ruins everything.

crossedsignals

Most likely they will run both and transition to VoLTE in the future. No sense migrating one to the other with VoLTE on the horizon.

...

JJinNYC

I don't see this going through. Lots of things against it. Sprint has way too much spectrum anyway. 200MHz worth. I don't see the government allowing one wireless provider to have 270Mhz of spectrum. Just not gonna happen

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ajac09

May 10, 2014, 9:21 AM

Tmobile about to be richer

Tmobile is about to be one billion richer

rwalford79

Sprint simply doesn't have $1 Billion laying around on its own, so it could get it from Softbank. Though Softbank already plunked tens of billions into Sprint, and little has been done to be competitive other than more broken promises of 4G (there is ...
(continues)

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insider.

May 10, 2014, 5:33 PM

I Love How T-Mobile Dictates All The Terms!

Most companies that are targets of hostile takeovers just want to sell the company and gain back some of their initial investment or mitigate their losses.

At Tmobile, they WILL only be SOLD if they can keep their same executive board members, same CEO, keep the name TMOBILE, AND get to keep ONE Billion US Dollars from the buyer if the new buyer's deal gets blocked by the justice department. Very bold!

rawvega

Well for one, this alleged deal wouldn't be a "hostile" takeover attempt. Two, T-Mobile wouldn't be dictating anything, it would be Deutsche Telekom. Third, all this article mentions is what DT allegedly wants, not what they've "dictated". Rest...
(continues)

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MadFatMan

May 11, 2014, 9:30 AM

I'm not saying she's a gold digger. ..."

Where else can you get this kind of payday for a "failed merger"?

just saying bro... Ray Charles could of seen this one coming.

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