Seeking to address national security concerns, Sprint Nextel and SoftBank, its Japanese suitor, are expected to enter into 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 as negotiations are continuing.
While common to most technology investments in the US by foreign companies, such agreements have come into sharper focus recently because of accusations by US 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 US systems and will replace Huawei equipment in Clearwire?s network. Clearwire is a discount cellphone firm Sprint is seeking to buy.
In meetings here on March 14, Masayoshi Son, the chairman and chief executive of SoftBank; Daniel Hesse, chief executive of Sprint; and Erik Prusch, chief executive of Clearwire, sought to reassure US officials that the merged company would take the steps necessary to ensure that its networks would not endanger US communications networks. SoftBank, one of Japan?s biggest cellphone companies, is offering to buy majority control of Sprint for $20.1 billion.
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.
In a filing with the Federal Communications Commission, whose approval of the merger is needed to allow the transfer of wireless-phone licenses, the Communications Workers of America said Huawei and ZTE were ?helping to build SoftBank?s next-generation 4G wireless network in Japan? and that Huawei also helped build wireless networks for Clearwire. But in their own FCC filing, SoftBank and Sprint called the union?s concerns ?misplaced.? The firms noted that national security reviews were already being conducted by Team Telecom, an interagency group that includes FBI, homeland security, justice and defense departments.