Sprint in Deal with U.S. Law Enforcement to Restrict China Gear, especially from Huawei

Seeking to address national security concerns, Sprint Nextel and SoftBank, its Japanese suitor, are expected to enter an agreement with American law enforcement officials that will restrict the combined company’s ability to pick suppliers for its telecommunications equipment and systems, government officials said on Thursday.

The agreement would allow national security officials to monitor changes to the company’s system of routers, servers and switches, among other equipment and processes, the officials said. It would also let them keep a close watch on the extent to which Sprint and SoftBank use equipment from Chinese manufacturers, particularly Huawei Technologies. The government officials spoke about the possible agreement on the condition of anonymity because negotiations are continuing.  SoftBank, one of Japan’s biggest cellphone companies, is offering to buy majority control of Sprint for $20.1 billion.

While common to most technology investments in the United States by foreign companies, such agreements have come into sharper focus recently because of accusations by United States government officials of espionage by foreign countries.

SoftBank and Sprint have already assured members of Congress that they will not integrate equipment made by Huawei into Sprint’s United States systems and will replace Huawei equipment in Clearwire’s network. Clearwire is a discount cellphone firm Sprint is seeking to buy.

Masayoshi Son, the Chairman and CEO of SoftBank; Daniel Hesse, CEO of Sprint; and Erik Prusch, CEO of Clearwire, jointly sought to reassure United States officials that the merged company would take the steps necessary to ensure that its networks would not endanger United States communications networks.

Representative Mike Rogers, Republican of Michigan and chairman of the House Permanent Select Committee on Intelligence, said on Thursday that he also met this month with the company executives, who promised him that they would not use equipment from Huawei.

“I expect them to make the same assurances before any approval of the deal” by national security officials, Mr. Rogers said. “I am pleased with their mitigation plans but will continue to look for opportunities to improve the government’s existing authorities to thoroughly review all the national security aspects of proposed transactions.”

A recent report by the intelligence committee identified Huawei and the ZTE Corporation, another Chinese equipment provider, as possible security risks. The report cited the companies’ potential ties to Chinese intelligence or military services.

References:

http://www.nytimes.com/2013/03/29/business/sprint-and-softbank-near-agreement-to-restrict-use-of-chinese-suppliers.html?ref=global&_r=0

http://arstechnica.com/security/2013/03/sprint-softbank-to-shun-chinese-networking-equipment/

http://www.washingtonpost.com/business/economy/softbank-sprint-said-by-us-lawmaker-to-make-huawei-pledge/2013/03/28/759abf78-97f0-11e2-b68f-dc5c4b47e519_story.html

http://techcrunch.com/2013/03/28/sprint-nextel-and-softbank-agree-not-to-use-huawei-equipment-after-merger/

http://viodi.com/2012/12/12/are-huawei-zte-fading-superstars-new-investments-seen-mostly-as-a-publicity-ploy/

One thought on “Sprint in Deal with U.S. Law Enforcement to Restrict China Gear, especially from Huawei

  1. What is Huawei, and why the arrest of its CFO matters, By Julia Horowitz, CNN Business

    The arrest of a top Huawei executive has roiled the business world and threatens to derail the tenuous trade truce between the United States and China. Experts are warning that what happens with Weng’s case could have huge implications for the broader US-China relationship.

    https://www.cnn.com/2018/12/06/tech/what-is-huawei/index.html

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