A Reuters report says AT&T might get out of a $6 billion break-up fee if its acquisition of T-Mobile is squashed.
operator AT&T, currently in the midst of a high-stakes legal battle with
the U.S. government over its proposed takeover of Deutsche Telekom's American
arm, T-Mobile USA, might not have to pay the $6 billion break-up fee it would
have been faced with if the deal does no gone through, Reuters reported.
"There are a number of options under which the contract will not come into
effect," an unnamed source was quoted by the news service as saying.
its agreement with Deutsche Telekom, the deal is only valid if the acquisition
receives regulatory approval within a certain timeframe, the source said on
Monday," Reuters reported. "Also, the agreement could become invalid if
regulatory conditions for the sale push the value of T-Mobile USA below a certain
level, the person said."
U.S. Department of Justice filed an antitrust lawsuit Aug. 31 seeking to
prevent the proposed merger of AT&T and T-Mobile, a $39 billion
deal. The DOJ argues the merger would reduce competition for mobile
wireless communications services across the United States, according to a
statement provided by the Justice Department.
DOJ statement added that the merger would result in higher prices, poorer
quality services, fewer choices and less product innovation. The Justice Department
filed the lawsuit in the U.S. District Court for the District of Columbia-the
same court that oversaw the original breakup of AT&T.
addition, the Federal Communications Commission in August dealt a blow to
AT&T by tying together the company's proposed acquisition with a $1.9
billion deal that would see AT&T acquire some of Qualcomm's spectrum
licenses. The agency's ongoing review has confirmed that the proposed
transactions raise a number of related issues, including, but not limited to,
questions regarding AT&T's aggregation of spectrum throughout the nation,
particularly in overlapping areas.
Watchdog applauded the DOJ for filing the antitrust complaint to block the
merger, calling it a victory for cell phone consumers, and urged the FCC to
reject the deal as well. Earlier this month, Consumer Watchdog wrote a letter
to the DOJ, the FCC and the California Public Utilities Commission, pointing
out that the very same promises of better services and cheaper prices that
AT&T makes today it also made back in 2004, when it sought permission to
merge with Cingular, only to betray those promises after federal officials
approved the deal.
Watchdog's lawyers subsequently brought a nationwide class action lawsuit
against AT&T in 2006 seeking refunds for AT&T's customers. AT&T
continues to fight that lawsuit, claiming that its customers are barred from
suing AT&T in courts and must take their dispute to arbitration panels paid
for by AT&T.
last thing beleaguered American consumers need right now is higher prices and
shoddier cell phone service. That's exactly what would happen if AT&T were
permitted to buy T-Mobile. The FCC should join DOJ in opposing this
anti-competitive proposal," said Harvey Rosenfield, founder of Consumer
Watchdog and one of the lawyers in the 2006 lawsuit against AT&T.
Nathan Eddy is Associate Editor, Midmarket, at eWEEK.com. Before joining eWEEK.com, Nate was a writer with ChannelWeb and he served as an editor at FierceMarkets. He is a graduate of the Medill School of Journalism at Northwestern University.