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US wants Sprint-SoftBank deal to avoid Chinese network equipment: WSJ

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Huawei (STOCK)
Huawei (STOCK)

In order for the $20 billion acquisition of Sprint Nextel by Japan’s SoftBank to go ahead, the US government wants to oversee network equipment purchases in a bid to keep Huawei and ZTE products out of the nation’s infrastructure, reports The Wall Street Journal. Last year, a Congressional report labeled the two companies’ equipment as a national security risk, and SoftBank uses Huawei equipment, popular in many markets for its low prices, on its own network at home.

It's unlikely that there will be specific prohibitions against the two companies' products

Citing an unnamed source, The Journal explains that the government is expected to require notification in advance of any equipment purchases for the core of Sprint’s network. However, because of concerns about violating trade rules, it’s unlikely that there will be specific prohibitions against the two companies’ products.

The news comes just as the latest US appropriations bill adds a provision requiring a number of departments to perform formal cyber espionage risk assessments before purchasing IT equipment. And while this additional restriction isn't likely to help already-strained US-China trade relations, The WSJ points out that a national security review is standard whenever a foreign company attempts to acquire a US wireless carrier, as was the case with T-Mobile’s acquisition of MetroPCS.