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Sprint’s ties to Chinese firm Huawei could complicate T-Mobile merger

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Sprint is majority owned by Japan’s SoftBank, which has worked with the Chinese telecom giant

Illustration by Alex Castro / The Verge

Congressional lawmakers are intent on urging President Donald Trump and his administration to closely examine Sprint’s proposed merger with T-Mobile due to the former’s ties to the Chinese government, according to a report from Bloomberg. Sprint does not have direct ties to Beijing. Rather, it’s that the US telecom is majority owned by Japan’s SoftBank, which has worked with Chinese telecommunications giant Huawei. Alongside fellow Chinese telecom ZTE, Huawei has been deemed a national security threat by the US government, with intelligence agencies and the Department of Defense banning Huawei phones and equipment from the military and ZTE very nearly shut down over an all-out trade ban.

“Recognizing that these companies operate as subsidiaries of foreign-owned firms — one of which maintains long-standing close ties with Chinese state-influenced entities — a full and robust national security investigation is required,” reads a draft letter sent to Treasury Secretary Steve Mnuchin, who oversees the national security review of the Sprint and T-Mobile deal. The draft, obtained by Bloomberg, was penned by Congressional critics of the deal and is now circulating the House of the Representatives.

According to critics, the relationship between SoftBank, which would control 27 percent of the combined T-Mobile and Sprint entity, and Huawei poses a risk to the development of next-generation wireless technology. “The Sprint, T-Mobile merger would increase telecommunications risks associated with third-party foreign entities, including Huawei, being utilized in the development of US 5G infrastructure,” the letter goes on to say. According to the letter, SoftBank is working with Huawei to use 5G technology to power service robots in Asia. Also, one of the primary arguments T-Mobile and Sprint have made for the merger is that it would accelerate America’s ability to deploy 5G networks and better compete with Asian telecoms.