The anticipated Sprint Corp and T-Mobile US Inc merger gained approval on Monday after security reviews from two national committees. This clears significant obstacles for the partnership which had been initially announced earlier this year.
CFIUS or the United States’ Committee on Foreign Investment and Team Telecom gave a pass to the $26 billion tie-ups. Team Telecom is a collective name referring to the Department of Justice, Department of Defense, and the Department of Homeland Security.
A Clearance Requisite
The two mobile providers are owned by foreign firms – Japanese company SoftBank Group Ltd and Deutsche Telekom AG. Both companies offered to stop making use of equipment from Huawei Technologies. This action raised the expectation for the merger to be cleared by CFIUS.
Initially, Deutsche Telekom had been pressured by U.S. Officials to stop utilizing gears made by Huawei. The companies supposed they had to conform to get the support from CFIUS which is led by U.S. Treasury Department.
Many governments all over the world have barred Huawei amidst issues of ‘backdoor chips” which could help Chinese espionage. Neither Sprint nor T-Mobile use products from the Chinese company. However, both of their parent firms use some of Huawei’s products for their other overseas markets.
The merger between the third and the fourth biggest wireless carriers in the U.S. was initially announced in April this year. On Monday, the companies said that Team Telecom had shown no oppositions to the plan. The team examined potential issues with law enforcement, national security, and public safety; and filed their results with the Federal Communications Commission.
John Legere, CEO of T-Mobile said that they are happy to accomplish these milestones in the merger. It was previously stated that the deal was expected to be completed in the first or second quarter of 2019.
The approvals are a testament to the solid partnership between the U.S. government and the two companies. Legere added that they are looking forward to their discussions with the rest of the regulatory agencies reviewing their transaction. At this point, they still need to get a green light for antitrust from the FCC and the Department of Justice.
A Matter Of Security
The United States government and its supporters have heightened pressure on Huawei. There have been many concerns that the company is controlled entirely by the Chinese State. Similarly, people are afraid that the network equipment manufactured by the company may contain “back doors” for cyber spying.
Multiple European and Australian telecom operators have said that they’ll exclude the Chinese company from their 5G or fifth-generation mobile networks.
Huawei’s issue has increased the economic tension between China and the United States. Just recently, Meng Wanzhou, Huawei’s CFO and the daughter of the company’s founder was arrested in Canada. She was extradited out of the country under the request of the U.S. According to the U.S. prosecutors, she was spreading false information to multinational banks about Huawei’s control of a company in Iran. China has already demanded her release.