SoftBank’s acquisition of Sprint faces regulatory delays
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SoftBank’s acquisition of Sprint faces regulatory delays

SoftBank’s $20 billion bid for a 70% stake in Sprint is set to face further delays after the US Department of Justice (DoJ) asked for more time to review the deal on national security grounds.

There was a mixed reception on Monday as the FCC’s period for groups to voice objections expired with rival bidder Dish saying it would not formally oppose the deal.

But the DoJ request is set to delay the deal anyway to allow time for the Committee on Foreign Investment  in the United States (CFIUS) to complete its review.

Sprint described the DoJ request as routine and said it continued to anticipate that the transaction would be completed in mid-2013.

Scrutiny from the Committee was expected because Sprint provides telecoms services to the US government and agencies, and market watchers speculate that Sprint may have to ring-fence this part of its business under a separate US board.

Much of the Committee’s review is expected to focus on SoftBank’s connection with Chinese vendors Huawei and ZTE, which have received a frosty reception in the US due to concerns of sabotage.

In a House Intelligence Committee report in September 2012, US companies were warned to steer clear of both companies.

SoftBank has existing relationships with both Huawei and ZTE having bought equipment from the vendors.

Bloomberg estimates that about 10% of SoftBank’s capital expenditure goes to the two for equipment including base band units and antenna systems.

SoftBank is aware of the issue and has already taken measures to reduce its exposure to Chinese companies.

The carrier prevented Chinese investors from buying shares in eAccess during a stake sale to multiple parties this month.

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