WASHINGTON (Reuters) – T-Mobile US Inc and Sprint Corp have won backing for their $26 billion merger from two national security reviews on Monday, clearing key hurdles in their tie-up bid.
The deal got a nod from the Committee on Foreign Investment (CFIUS) in the United States as well as the Justice Department, Department of Homeland Security, and Defense Department -collectively referred to as Team Telecom, the companies said.
The merger between T-Mobile and Sprint had been expected to get an all clear from CFIUS after sources told Reuters on Friday that the firms’ respective foreign owners, Deutsche Telekom AG and Japan’s SoftBank Group Ltd, had offered to stop using Huawei Technologies [HWT.UL] equipment.
People familiar with the deal said last week that U.S. officials had pressured Deutsche Telekom to stop using Huawei gear, and the companies believed they had to comply to win approval from CFIUS, headed by the Treasury Department.
Many governments around the world have shut out the Chinese firm amid worries its gear could facilitate Chinese spying. While T-Mobile and Sprint do not use Huawei equipment, Deutsche Telekom and SoftBank use some Huawei gear in overseas markets.
T-Mobile and Sprint, the third- and fourth-largest U.S. wireless carriers, said on Monday that Team Telecom, in a filing with the Federal Communications Commission (FCC), indicated it had no objections to the merger after reviewing “potential national security, law enforcement, and public safety issues.”
“We are pleased to achieve both of these important milestones in the journey to build the New T-Mobile,” T-Mobile CEO John Legere said in a statement. The company has previously said it expects the deal to close in the first half of 2019.
“These approvals assure the strong partnership both companies have with the U.S. government will continue with the New T-Mobile. We look forward to continuing our discussions with the remaining regulatory agencies reviewing our transaction.”
The U.S. wireless carriers still need to win antitrust approval from the Justice Department and the FCC.
The U.S. government and its allies have stepped up pressure on Huawei amid concerns the company is effectively controlled by the Chinese state and its network equipment may contain “back doors” that enable cyber espionage, something Huawei denies.
Several telecom operators in Europe and Australia have said they will exclude the Chinese firm from their fifth-generation (5G) mobile networks.
The pressure on Huawei has heightened tensions between the United States and China over trade. Earlier this month, Meng Wanzhou, Huawei’s chief financial officer and daughter of its billionaire founder, was arrested in Canada at the request of the United States, which has asked for her extradition.
U.S. prosecutors have accused her of misleading multinational banks about Huawei’s control of a company operating in Iran. China has asked for her release.