Deutsche Telekom, AT&T clash over T-Mobile deal interests

While Deutsche Telekom (DT) and AT&T remain resolute in their ambition to push AT&T's proposed $39 billion acquisition T-Mobile USA deal through despite a lawsuit from the US Department of Justice, alternative options are being worked out behind the scenes.

While DT CEO Rene Obermann is said to have the full support of the company's board, pressure is mounting for the management to consider what routes might be available if the deal does collapse. Heading the list, according to a report carried by Bloomberg, are the options of selling off T-Mobile USA to its shareholders, reviving negotiations with previously interested parties or packaging the US subsidiary for an initial public offering.

Moreover, while DT and AT&T are keeping with the plan to push the deal though at almost any cost, AT&T has more to gain by a protracted legal battle. This strategy would keep its smaller rivals in a state of uncertainty, and delay the potential of paying DT as much as $6 billion in break-up fees.

While none of the options for T-Mobile USA look particularly inventive, DT CFO Timotheus Hoettges confirmed that it had discussed the sale of T-Mobile USA with five companies prior to the AT&T deal. One of those companies was reportedly Sprint Netxel.

Also, Heinrich Ey, a fund manager at Allianz Global Investors in Frankfurt, told Bloomberg that an IPO of T-Mobile USA could raise as much as €20 billion, or $28 billion, albeit far removed from the $39 billion that AT&T offered. 

But the chances of the deal failing seems evermore likely, with analysts lowering their ratings of it going ahead. Will Draper, from the financial services firm, Espirito Santo, said the deal now has a 75 per cent risk of failing, up from 50 per cent.

For more:
- see this Bloomberg article

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