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T-Mobile's $3B Cash Break Up Fee from AT&T will Save it for a While

Dec 20 2011, 2:35pm CST | by , in News | Technology News

T-Mobile's $3B Cash Break Up Fee from AT&T will Save it for a While
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T-Mobile is set for the next year

We mentioned this morning that AT&T decided to pull out of the proposed purchase of T-Mobile and has been forced to cough up $4 billion in cash and wireless spectrum for backing out. T-mobile parent company Dutsche Telekom has announced that the massive $3 billion cash payment for backing out of the deal will hold T-Mobile over for a while.

Estimates say that the $3 billion will cover the expenses for T-Mobile for the next 12 to 24 months before T-Mobile needs to look again for a new partner. Analysts Wolfgang Specht says that if the funds run out before T-Mobile has a partner in place it will not have enough cash flow to cover capital spending.

The deal fell through once it became apparent that the sell of of T-Mobile assets wasn’t enough to satisfy US regulators. AT&T and T-Mobile merged would have made AT&T the largest of the carriers in the US. T-Mobile isn't doing well though and has lost 849,000 contract customers in the last nine months.

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