The T-Mobile US Inc (NYSE:TMUS) parent company reportedly wants Sprint to agree to a “breakup fee” worth over $1 billion if regulators block a merger between the U.S. carriers. Deutsche Telekom AG owns 67% of T-Mobile and allegedly wants Sprint to keep the T-Mobile brand and some management if it is allowed to acquire the company, according to The Wall Street Journal.
This would help mitigate costs for Deutsche Telekom if regulators decide to block a merger. AT&T had a similar breakup fee with Deutsche Telekom when it attempted to acquire T-Mobile in 2011. AT&T ended up paying Deutsche Telekom a breakup fee of almost $4 billion, which included $3 billion in cash and $1 billion in spectrum after regulators blocked the deal.
Deutsche Telekom, one of the largest telecommunications companies in the world, has around 145 million mobile customers worldwide. Deutsche Telekom hit around $82.68 billion in revenue in 2013.
T-Mobile has been aggressive with all sorts of new types of plans with an “Uncarrier” branding. This lets subscribers pay off contract terminations fees if they defect and it helped the company sign up 2.4 million new customers in the first quarter.
During the fourth consecutive quarter, T-Mobile added over 1 million total net customers. Sprint lost 467,000 customers in the first three months of the year.