Deutsche Telekom is looking for a hefty compensation package from Sprint in the event any future merger with T-Mobile US is blocked by regulators, according to The Wall Street Journal.

The German operator wants a breakup fee of more than $1 billion, on top of guarantees that the T-Mobile US brand and management would remain in place post-merger, according to sources familiar with the negotiations.

Deutsche Telekom owns 67 per cent of T-Mobile US.

The demands reflect trepidation about whether US regulators will block any merger on competition grounds.

Comments from regulators have shown their scepticism about further US industry consolidation.

“We’re getting signals from the regulatory authorities as well as antitrust authorities that such a merger isn’t seen as expedient,” said Deutsche Teleom CEO Timotheus Hoettges on the company’s earnings call last week.

“Against that backdrop, we have to see how we can develop the business so it creates the most value for our shareholders.”

Deutsche Telekom has been this route before, and benefited from the experience. The end of acquisition talks with A&T in 2011 enriched it to the tune of $3 billion, as well as spectrum and a long-term agreement on 3G roaming in the US.

For its part, Sprint is said to be wary about giving away too much to a competitor in the event that talks do indeed fall apart under regulatory scrutiny.

If that seems a negative outlook, more optimistically both companies are said to back the industrial logic of a merger.

Both sides also seem to agree that a deal is more likely to be approved in a few years under a different administration but are concerned about the repercussions from waiting as larger rivals AT&T and Verizon Wireless grower stronger.