AT&T may not be on the hook for that fee under certain conditions, a source told Reuters inside a story that ran today.
Spokesmen for AT&T, T-Mobile, and Deutsche Telekom didn't immediately react to CNET's requests for a comment.
AT&T and T-Mobile were thrown for any loop last week when the Department of Justice sued in order to block AT&T's planned acquisition of T-Mobile, citing concerns over losing competition in the industry. AT&T has been scrambling to keep the deal in existence and is expected to offer up more compromises to find the deal done.
Many in the industry expected AT&T to accomplish the acquisition, swayed by the unusually large break-up costs. Those fees are typical of M&A deals, ensuring some protection towards the seller if the transaction falls through. But the big size, which includes $3 billion in cash and the total amount in services, assets, and a roaming agreement, suggested AT&T was confident in its capability to close the deal.
The break-up fee would only end up being paid if certain conditions were met, Reuters said. The offer has to receive regulatory within a certain time, or even the contract is deemed void. The value of T-Mobile also can't come under a certain level, which could happen if the government requires that parts of the business need to be sold to get the deal approved.
Without the break-up charge, Deutsche Telekom is left with a weakened T-Mobile that's been hurt by the publicity over the pending deal. In spite of offering price cuts and promotions, T-Mobile continues to lose its best contract customers at an alarming rate. In addition, it lacks the spectrum to construct its own true 4G wireless network.
The deal has shown to be a contentious issue. AT&T has argued that the deal is essential to increase its spectrum position and allow for the wider deployment of 4G services, and has boasted backed from several states, its unions and technology companies. But opponents for example Sprint Nextel, consumer advocate groups and other wireless companies have contended that the deal would hurt competition and innovation in the market.
