Softbank, Sprint, US Reach Deal on Security

Apparently it is in fact ok for a US ally to own one of the country’s larger telecom companies. Softbank, Sprint-Nextel, and the US government have apparently come to terms on a security agreement that when finalized will clear one more hurdle out of the path to closing Softbank’s purchase of 70% of the wireless carrier.

I would have thought that more attention would be spent on the wireline side, which services various federal contracts for bandwidth and services transmitting actual sensitive data. But the media and the more vocal politicians at least are more interested in the equipment side of things. And in fact, the US government will have veto power over new equipment in certain circumstances.

That is of course politico-diplomatic speak for formalizing the de-facto ban on future gear from Huawei and ZTE that has already been discussed and has been shaking things up for half a year now. I still find it all to be little more than a political fig leaf for more conventional protectionism against an actual economic threat. But I suppose it doesn’t really matter in the end what public face gets put on it.

There will also be a four person oversight committee set up by the US government to make sure security promises are kept, on which a Sprint representative will also sit.  It’s all faintly reminiscent of the arrangement Singapore Technologies and Telemedia agreed to back in 2004 when it purchased control of Global Crossing, updated simultaneously for a bigger corporation, a bigger ally, and bigger Chinese espionage fears.

Now all Softbank has to do is successfully fend off Dish’s competing offer, which has a higher, albeit nominal, price tag valuing the company at $25.5B. Well, that and hope that Sprint’s purchase of Clearwire goes through this week at the new price of $3.40 despite continued opposition by some of those large investors. Summer’s just getting started.

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Categories: Government Regulations · Mergers and Acquisitions · Wireless