AT&T swallows T-Mobile

As the dust settles from yesterday's announcement that AT&T has withdrawn its bid to purchase T-Mobile, the paperwork is coming out on just how much Big Blue must pay Magenta for essentially wasting its time.

It had been known for some time that AT&T was going to have to pay a fee to T-Mobile should the deal not go through, and the belief had been that the dollar amount was $4 billion, a far cry from the $39 billion the total deal would have been worth.  However, in the hours since the deal folded, T-Mobile is saying the true value of the break-up is closer to $6 billion.

The discrepancy comes in the form of spectrum that Ma Bell will be handing over to Deutsche Telekom's U.S. division.  There is $3 billion in cash that is locked in, but the other $1 billion comes in the form of the value AT&T placed on the spectrum; T-Mobile is pegging its value at closer to $3 billion.  Also included in the deal is a seven year roaming agreement that will give Magenta expanded coverage in 128 cities (including 12 of the 20 largest markets: Los Angeles, Dallas, Houston, Atlanta, Washington, Boston, San Francisco, Phoenix, San Diego, Denver, Baltimore and Seattle), another aspect that AT&T is not assigning a value to.

At this point it appears that T-Mobile is the only one to come out of this deal as a winner, but the truth is that it still sits in fourth place amongst the largest carriers in the U.S., and now it has nearly a year of wasted time to make up for in how it can approve its lot in life.  No matter how you value the deal, T-Mobile is walking away with some cash and much needed spectrum, but the question is if it will be enough to keep itself going.

What do you think about the settlement deal between AT&T and T-Mobile?

[via Dealbook]