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Telco may forego break fee
Source: Agencies |
September 6, 2011, Tuesday
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Print Edition
DEUTSCHE Telekom AG could miss out on a multi-billion dollar break fee if regulatory hurdles cause the failure of its US$39 billion deal to sell T-Mobile USA to AT&T, a person familiar with the matter said.
"There are a number of options under which the (break fee) contract will not come into effect," the person, who is familiar with the contract, told Reuters yesterday.
Deutsche Telekom declined comment.
The US government last week sued to block AT&T's purchase of T-Mobile USA, a deal that would vault the combined company above Verizon Wireless as the No. 1 player in the United States.
As part of the AT&T deal, Deutsche Telekom had secured a break fee comprising US$6 billion in cash and other assets should regulators reject the deal.
But the source said yesterday that AT&T will only have to pay that fee if certain conditions are met.
For instance, the purchase has to get regulatory approval within a certain timeframe, the source said. Otherwise, the contract is void.
Also, the value of T-Mobile USA may not fall below a certain level, the person said. That could happen, for instance, if regulators demand that parts of the company be sold as a condition for approval of the deal.
Shares of Deutsche Telekom have lost about 17 percent of its value over the past month.
"There are a number of options under which the (break fee) contract will not come into effect," the person, who is familiar with the contract, told Reuters yesterday.
Deutsche Telekom declined comment.
The US government last week sued to block AT&T's purchase of T-Mobile USA, a deal that would vault the combined company above Verizon Wireless as the No. 1 player in the United States.
As part of the AT&T deal, Deutsche Telekom had secured a break fee comprising US$6 billion in cash and other assets should regulators reject the deal.
But the source said yesterday that AT&T will only have to pay that fee if certain conditions are met.
For instance, the purchase has to get regulatory approval within a certain timeframe, the source said. Otherwise, the contract is void.
Also, the value of T-Mobile USA may not fall below a certain level, the person said. That could happen, for instance, if regulators demand that parts of the company be sold as a condition for approval of the deal.
Shares of Deutsche Telekom have lost about 17 percent of its value over the past month.
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