A few years ago, AT&T attempted to buyout T-Mobile, although this was not a successful venture which saw the deal fall through, and also saw AT&T pay T-Mobile a whopping $3 billion in a breakup fee along with some additional spectrum. It seems that T-Mobile is also looking for a breakup fee from Sprint as well, should the regulators disallow the acquisition to go through.
A report from The Wall Street Journal has revealed that T-Mobile is asking Sprint for a $1 billion breakup fee in the event that the deal falls through. We doubt Sprint and its new owner, Softbank, will be too pleased by this request, especially since Softbank’s CEO has stated in the past that he would like to avoid paying such a fee if it could be helped, especially since neither company can afford to pay it.
T-Mobile is also reportedly demanding that the T-Mobile brand and some of its management to be kept around if and when the deal is completed. In fact word has it that T-Mobile’s CEO, John Legere, will be tasked to run the Sprint/T-Mobile merger if it does go through. An official bid has yet to be placed, although rumors are suggesting it could take place in June/July.
Regulators like the FCC and the FTC have openly expressed that they are not happy about the idea, which suggests that the deal could be killed before it is even announced. The regulators believe that by having four major carriers that it would foster competitiveness, which was one of the reasons why they did not allow the AT&T/T-Mobile deal to go through.
In the meantime, Dish Network’s Chairman has openly stated that the company would consider a bid on T-Mobile if things do not work out with Sprint. This is because Dish Network does not have the resources that Sprint does to get into a bidding war with the company, but what do you guys think? Does a $1 billion breakup fee seem fair? Especially since it seems likely that regulators will most likely end up disallowing the deal?