Sprint, SoftBank reportedly reach security deal with U.S.

The tentative agreement includes a security committee at the company should the merger go through and gives the U.S. government veto power over equipment purchases, sources tell The Wall Street Journal.

SoftBank and Sprint Nextel have reportedly agreed to give the U.S. government veto powers and other oversight to alleviate national security concerns related to their planned $20 billion merger.

As part of the agreement, expected to be finalized in the coming days, the merged company would feature a four-member national-security committee, as well as a security director who would sit on the wireless carrier's board, people familiar with the matter told The Wall Street Journal. The U.S. government would gain veto powers over any equipment purchases made by Sprint, and Sprint has agreed to remove Chinese-made equipment from its networks by 2016.

CNET has contacted Sprint and Japan-based SoftBank for comment and will update this report when we learn more.

The agreement, considered the last hurdle to the merger winning U.S. approval, is intended to alleviate U.S. government concerns about gear from Chinese suppliers Huawei Technologies and ZTE becoming part of the U.S. infrastructure. The two companies have been criticized by the U.S. House Intelligence Committee, which released a report last October that accused Chinese telecommunications gear makers of being threats to U.S. security and that discouraged U.S. companies from buying their equipment.

The national security concern has also been raised by Dish, which launched a rival unsolicited $25.5 billion bid to acquire Sprint last month. Dish told the Federal Communications Commission in April that "Dish's merger proposal is better for American consumers, better for Sprint shareholders, and better for national security than the SoftBank proposal."

Rep. Mike Rogers, R-Mich., chairman of the House intelligence committee, said in March that he had met with representatives from both companies and was assured that equipment from the Chinese telecommunications gear maker would not be used in the U.S. cellular infrastructure.

SoftBank's deal, which was announced last October, is expected to give Sprint more muscle to compete with the major players in the wireless industry. The increased size achieved by the combined operations of the two carriers could lead to a better selection of phones, more competitive price plans, and ultimately, better service.

 

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