Sprint and TMO closer to merger, was Huawei a negotiating pawn?

There is still plenty of vocal opposition to the proposed merger of Sprint and T-Mobile USA, but the deal is looking increasingly likely to be approved without significant conditions during 2020.

It crossed a major hurdle last week when it was green-lighted by the Committee on Foreign Investment in the US (CFIUS) and other regulatory bodies. One reason for the decision was reported to be promises by T-Mobile’s and Sprint’s parent firms (Deutsche Telekom and Softbank of Japan respectively) to review their use of Chinese equipment in their networks.

If so, this shows how the USA is pressurizing allied countries to exclude Huawei and ZTE from critical projects (see separate item). Japan has already introduced restrictions, which will affect Softbank more than its rivals, since it has worked with Huawei on 4G roll-out and 5G trials. It is not clear how Deutsche Telekom will proceed, though the security authorities in its home country of Germany recently said they will not introduce sanctions unless they see concrete proof of espionage.

As well as CFIUS, the TMO/Sprint marriage was blessed by the US Departments of Justice, Homeland Security and Defense.

In a joint statement, the operators said the three Departments had made no objections to the deal, which they indicated in a filing to the FCC, after reviewing potential impacts on national security, law enforcement and public safety. As a result, the Departments had withdrawn a request to defer action on the merger.

T-Mobile CEO John Legere said the approvals were “important milestones”, though the FCC still has to approve the deal, and though the DoJ has cleared it on law enforcement grounds, it still needs to decide on the antitrust implications. Legere said the companies now expect the deal to be completed in the first half of 2019.

“We are a step closer to offering customers a supercharged disruptor that will create jobs from day one,” he said.