Sprint & Softbank: Don’t Worry, We’ll Dump Huawei and ZTE

Sprint Nextel Corp. (NYSE:S) and Softbank informed representative Mike Rogers, R-Michigan, that they will not be integrating technology from Chinese manufacturer Huawei into the Sprint network following a merge, Representative Rogers has said. Rogers oversees the House Intelligence Committee.

“I expect them to make the same assurances before any approval of the deal” by U.S. agencies reviewing the proposed $20 billion merger for national security implications, he said in an email. The third largest wireless network in the United States and the Japanese firm were questioned over a review of their merger, and are trying to quell U.S. concerns about potential electronic spying by China, Bloomberg reported.

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A report filed last October by Rogers’ office says the U.S. should actively block mergers by Huawei and ZTE, the two largest phone equipment makers in China. The report said the companies’ equipment can provide an opening for Chinese intelligence services to use U.S. telecommunications networks for spying.

“I have met with Softbank and Sprint regarding this merger and was assured they would not integrate Huawei in to the Sprint network and would take mitigation efforts to replace Huawei equipment in the Clearwire (NASDAQ:CLWR) network,” Rogers said, referring to Sprint’s majority stake in the fellow wireless company.

Reportedly, Huawei is unaware of the national-security review, according to U.S.-based Huawei spokesman Bill Plummer. The agencies involved in the review include the Justice Department, Federal Communications Commission, and an interagency delegation called the Committee on Foreign Investment in the U.S., or CFIUS. The latter checks for security implications of foreign purchases of U.S. companies.

“If government approval of the transaction is somehow contingent on an agreement to restrict purchase of equipment from any vendor based on the flag of heritage, then it is a sad day for free and open global trade and it does nothing to secure the network,” Plummer said. “Everyone is global and every company faces the same cyber challenges.”

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Softbank uses Huawei and ZTE components for its mobile network in Japan, and Clearwire uses Huawei for some of its fringe network needs (its core network relies on domestic vendors).

Virtually all involved, from Sprint to the Justice Department, with the exception of Bill Plummer, declined to comment on the matter.

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