Sprint Connection

SoftBank-Sprint deal reportedly has national security approval

Updated: 2013-06-25T15:34:23Z


SoftBank Corp.’s $20.1 billion takeover of Sprint Nextel Corp., the third-largest U.S. wireless carrier, appears to have passed a national security review by U.S. officials, according to a person familiar with the matter.

The Committee on Foreign Investment in the U.S. and the two companies reached an security agreement following a thorough review of the proposed transaction, the person said.

The agreement, which could be announced any time, would remove a hurdle to the deal to give Tokyo-based SoftBank control of Sprint.

Holly Shulman, a committee spokeswoman, and Scott Sloat, a Sprint spokesman, declined to comment, as did a SoftBank representative.

Dish Network Corp., which has made a $25.5 billion counteroffer for Sprint, has said allowing SoftBank to control a U.S. phone network would compromise national security. SoftBank uses some network gear made by Chinese manufacturers, and Sprint’s joint venture partner, Clearwire Corp., has Huawei Technologies Co. equipment in part of its network. Both carriers have said they plan to discontinue purchases and dismantle network equipment provided by Chinese companies.

The terms of the agreement include the appointment of at least one director to Sprint’s board to keep an eye on national security, and provisions that will allow the government to approve non-U.S. vendors, the person said. The agreement also has a provision to remove from Clearwire’s network equipment made by vendors that haven’t won national security approval, if Sprint concludes a separate transaction to acquire full ownership of Clearwire.

Separately, The Wall Street Journal reported that the agreement included a four-member committee to monitor security concerns, including the security director on the board.

SoftBank has also agreed to establish a small subsidiary with separate operations that would handle classified government work under a related national security agreement.

Similar provisions were put in place when Paris-based Alcatel combined with Murray Hill, N.J.-based Lucent Technologies Inc. and also when Bermuda-based Global Crossing Ltd. got an investment from Singapore Technologies Telemedia Pte.

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