Deutsche Telekom AG isn't walking away empty-handed now that the AT&T/T-Mobile USA merger has been called off.
The German telecom behemoth, which owns T-Mobile USA, is getting a $3 billion break-up fee in cash from AT&T, a package of mobile spectrum in 128 markets that will benefit its mobile-operator child, and a roaming agreement that will enable T-Mobile USA to broaden its broadband coverage.
Deutsche Telekom said T-Mobile USA will obtain mobile spectrum in 12 of the top 20 markets and a UMTS roaming agreement that will allow T-Mobile USA to increase its coverage from 230 million potential customers to 280 million.
"As a result of the agreement with AT&T, coverage will be extended to many regions of the U.S. in which T-Mobile USA previously had neither its own high-speed mobile communications network nor the associated roaming agreements," Deutsche Telekom said.
That's the good news.
The more somber reality is that T-Mobile USA continues to struggle to compete effectively with its bigger competitors, and Deutsche Telekom Chief Executive Rene Obermann conceded today that the company had no viable backup plan to the AT&T deal to present to investors, according to The Wall Street Journal.
Dallas-based AT&T and Deutsche Telekom yesterday officially dropped their bid to complete the merger between AT&T and T-Mobile USA in the face of strong government opposition.
AT&T is the second-largest wireless operator and has continued to grow its customer base. T-Mobile USA, the fourth-largest mobile operator, has mostly struggled with subscriber losses.
The U.S. Department of Justice and Federal Communications Commission expressed concerns that the merger would have significantly reduced competition, with AT&T and market leader Verizon Wireless controlling 75 percent of the market.
