Sprint tie-up with T-Mobile could face extra scrutiny over China links

05 July 2018 | James Pearce

The proposed merger between Sprint and T-Mobile in the US could be subjected to additional scrutiny due to the former’s ties to China, according to a report.

Bloomberg reports that US lawmakers are concerned by link between Sprint’s majority owner SoftBank and Chinese manufacturer Huawei, which, along with rival ZTE, has been deemed a national security threat by the US Department of Defense.

The report claims US lawmakers are set to put pressure on the Trump Administration when it assesses the proposed merger between Sprint and T-Mobile, Deutsche Telekom’s US mobile operation.

In a letter seen by the news agency that is set to be sent to Treasury Secretary next week, will ask the administration to conduct "a full and robust national security investigation" into the $26.5 billion deal, which was agreed earlier in the year after years of speculation and negotiation.

The letter was drafted by critics of the deal who are seeking signatures from members of the House of Representatives. The deal will, which brings together the third and fourth (T-Mobile and Sprint) wireless carriers in the US, will need to be rubber-stamped by the Committee on Foreign Investment in the US, and then approved by President Trump.

SoftBank, which became majority shareholder in Sprint in 2013, has a longstanding relationship with Huawei, which has included recent trials of 5G technology and the involvement of Wireless X Labs to demonstrate cutting edge use cases for IoT and future technologies.

Sprint has pointed to its "strong record of compliance" with US laws, including replacing $200 million of Clearwire equipment after it acquired the company.

The letter comes as US officials and intelligence agencies have labelled Huawei and ZTE as a security threat, leading to a band on Huawei phones and quipment in the US military. The strained relations with the Chinese vendors reportedly led AT&T to ditch a plan to range Huawei phones in its stores, whilst it has also cause significant problems for ZTE, which was almost forced to shutdown due to a trade ban. 

Topics: Sprint, T-Mobile, China, US, mergers and acquisitions, Deutsche Telekom, SoftBank