Deutsche Telekom: 'FCC, DoJ didn't give AT&T deal a chance'

Tried to flog T-Mobile USA and all it got was this lousy $3bn cheque


Deutsche Telekom, parent of T-Mobile USA, has hit out at US regulators over the collapse of its merger deal with AT&T in the US.

AT&T and T-Mobile USA abandoned their planned marriage yesterday, a move that was no surprise after huge resistance from the Federal Communications Commission and the Department of Justice.

Both bodies claimed that the proposed tie-up raised competition concerns, and also questioned whether the deal would provide the benefits for employment and consumers that the two firms said it would.

Rene Obermann, Deutsche's chief exec, told the Financial Times today [paywall] that the deal was never even given a chance.

"We never really got to a thorough inspection," he said, adding that the merger wouldn't have created a company that was much bigger than the current US top dog Verizon Wireless.

"Given that, I don't really understand the position of the US authorities," he sniffed.

Deutsche is very keen to offload its US subsidiary, but the tidy little pile of break-up provisions in the AT&T deal should keep it afloat for now.

The German telco is due $3bn in cold hard cash from AT&T because the merger failed, as well as a large package of mobile spectrum and a long-term deal on UMTS roaming.

"This is one of the highest payments ever agreed between two companies for the termination of a purchase agreement," Deutsche reminded its shareholders in a statement.

The firm also assured its investors that its guidance for the 2011 financial year was unchanged.

"Even following the termination of the agreement with AT&T, Deutsche Telekom expects to remain within the communicated ranges for certain financial performance indicators used to assess the financial performance of the company," it said.

"The cash component of the break-up fee directly reduces Deutsche Telekom’s net debt, thereby by strengthening the financial performance indicators affecting the company’s rating."

Obermann didn't want to be drawn on what exactly Deutsche was going to do with its unwanted American cousin, but he said the company was "working on it". ®


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