Why T-Mobile Could Gain Tremendously if AT&T Merger Falls Apart

Even though  Deutsche Telekom released a statement sharing AT&T’s disappointment in the Department of Justice’s (DOJ) antitrust lawsuit today, the company could actually fare well if the merger falls through. This seeming quite possible now that the DOJ has moved to break up the controversial acquisition.

If in fact the $39-billion deal crumbles, AT&T will have to actually pay T-Mobile’s German parent company, Deutsche Telekom a staggering $3 billion in cash as part of the termination requirement. To make matters worse, AT&T will also have to serve up airwaves and a roaming agreement that could total in additional billions.

Ironic that in AT&T’s path to become the world’s largest carrier it may just provide the cash and resources T-Mobile needs to become one of its biggest rivals. A break-up fee of this magnitude could definitely catapult T-Mobile into a forceful contender in the wireless industry.

Termination requirements, or otherwise known as break-up fees, are intended to protect companies like Deutsche Telekom and T-Mobile. In acquisitions of this nature, it often leaves the company susceptible to other competitors in scavenger mode. Additionally, important employees to the company are also at risk of abandoning the company during a merger. T-Mobile found itself in trouble when Deutsche Telekom announced they would no invest into the company.

So where does this leave AT&T? With stakes this high, AT&T has no choice but to fight hard for the acquisition to succeed. AT&T’s counsel stated Wednesday that the firm plans to fight “vigorously” in court. Either way, there’s no turning back now.

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