The dust is settling from yesterday’s news that AT&T has given up its T-Mobile acquisition plans, and it turns out even a failed merger is quite expensive.
Because its proposed $39 billion merger fell through, AT&T now has to give up piles of cash and benefits to T-Mobile. AT&T will enter into a 7-year 3G roaming agreement that will boost T-Mobile coverage, and it has to give up a valuable package of AWS (Advanced Wireless Solutions) mobile spectrum that covers 128 cellular market areas (CMAs), including 12 of the top 20 U.S. markets. Overall, the agreements will boost T-Mobile’s blanket coverage from 230 million to 280 million people in America.
On top of doling out valuable benefits that will help the competition, AT&T will also pay $3 billion in cash to T-Mobile parent Deutsche Telekom. That $3 billion amount is one of the highest break-up fees ever.
The new service agreements will be important to T-Mobile USA if it wants to stem the tide of customers leaving its service. At the very least, T-Mobile’s current customers will benefit from the company having more coverage and spectrum that can help deliver data on smartphones.
T-Mobile said early today that there was “no Plan B” and the company is scrambling to figure out what to do next. Because the company doesn’t officially offer the iPhone, it has a major disadvantage when going up against AT&T, Verizon and Sprint.