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Investment Banks to Reap $145 Million in Fees from AT&T's $39 Billion Deal

Strategic Insights

— 2 min read

Investment banks are set to earn massive fees from AT&T's $39 billion acquisition of T-Mobile USA, with Morgan Stanley and JPMorgan Chase & Co leading the charge. The deal marks the largest telecom deal worldwide since AT&T's acquisition of BellSouth in 2006, cementing Morgan Stanley's position as the top adviser globally this year. The banks advising AT&T are estimated to rake in $55 million to $65 million, while those advising Deutsche Telekom, the seller, could earn $50 million to $60 million.

Key Takeaways:

  • Morgan Stanley and JPMorgan Chase & Co are leading the charge in advising AT&T on its $39 billion acquisition of T-Mobile USA, with Morgan Stanley retaining its position as the top adviser globally this year.
  • The deal is estimated to generate $55 million to $65 million in fees for investment banks advising AT&T, split between JPMorgan and two boutique firms, Greenhill and Evercore.
  • Deutsche Telekom's other advisers, Credit Suisse and Deutsche Bank, rise in the tables to No 5 and No 8, respectively.
  • Greenhill, which was not previously in the top 25, is now ranked No 13, while Evercore rises three places to No 7.
  • Goldman Sachs was advising Sprint Nextel, which held talks to merge with T-Mobile but is now left to determine its next move.
  • JPMorgan will also reap fees for underwriting a bridge loan to AT&T, with upfront arrangement fees on the bridge loan estimated to be around $20 million.
  • Typical fees in a transaction of this size are 0.15 to 0.17 per cent of the deal's value for buy-side M&A advisers and 0.14 to 0.16 per cent for the sell-side banks.

Statistics:

  • Estimated fees for investment banks advising AT&T: $55 million to $65 million
  • Estimated fees for investment banks advising Deutsche Telekom: $50 million to $60 million
  • Rank of Morgan Stanley in M&A advice worldwide this year: No 1
  • Rank of Deutsche Telekom's other advisers, Credit Suisse and Deutsche Bank: No 5 and No 8
  • Rank of Greenhill: No 13
  • Rank of Evercore: No 7
  • Upfront arrangement fees on the bridge loan underwritten by JPMorgan: around $20 million
  • Size of the bridge loan: $20 billion
  • Commitment for the bridge loan: 18 months

Sources:

  • Thomson Reuters data
  • Freeman & Co estimates
  • Freeman & Co Managing Director Teck-Tjuan Yap
  • Thomson Reuters LPC
  • I Media LLC 2011
  • Syndigate.info
  • Albawaba.com

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