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When AT&T Inc. (NYSE: T) killed the $39 billion deal for T-Mobile USA it had agreed to with Deutsche Telekom AG (OTC: DTEGY), the $4 billion break-up fee going to DT is not likely to do much but paper over more serious problems. Speculation has revived that Sprint Nextel Corp. (NYSE: S) may be a possible acquirer, which would give the Sprint/T-Mobile a more competitive position in the US against both AT&T and Verizon Wireless, a joint venture between Verizon Communications Inc. (NYSE: VZ) and Vodafone plc (NASDAQ: VOD).

Sprint has just thrown all its cash behind the iPhone from Apple Inc. (NASDAQ: AAPL), and its current market cap of around $7 billion probably isn’t going to attract more than $30 billion in lending. Besides, Sprint was vocally opposed to the AT&T/T-Mobile deal and might be in line for some payback for the breakdown. But DT has other issues to solve.

First, of course, are shareholders’ expectations, which have been severely pulled in following the cancellation of the T-Mobile sale. According to a report at Bloomberg News, DT planned to use about $6.5 billion to repurchase shares and cut debt, both welcomed by shareholders. A bonus was the 8% stake that DT would acquire in AT&T. That’s all gone.

Worse, though, is that unless DT can come up with another deal, dividend payouts beyond 2012 are questionable. The company’s current dividend yield is 7.9%, but with other expenses facing DT some analysts question how long that payout can last.

The final drag on DT is Europe, where it conducts most of its business. European economies are struggling and so are European consumers. DT expects to return to growth in Europe by 2013, but that may be wishful thinking given the current state of affairs.

Paul Ausick