March 28, 2013, 3:51 PM — Sprint Nextel and Softbank have pledged to keep Huawei Technologies products out of the Sprint network and try to replace Huawei gear that is already in Clearwire's network, according to a U.S. lawmaker.
The companies met with Rep. Mike Rogers, chairman of the House Intelligence Committee, as the government reviews Softbank's planned US$20.1 billion investment in Sprint. Because Softbank is a Japanese company and would own 70 percent of Sprint if the deal goes through, the transaction is subject to extra scrutiny from various agencies, including the Defense Department, the Department of Homeland Security and the Committee on Foreign Investment in the United States (CFIUS). Those agencies might place conditions on their approval of the deal.
Several arms of the U.S. government have acted to block Huawei from the U.S. market because they say the company has ties to the Chinese government, a charge Huawei denies. The Intelligence Committee, under Rogers, last year said network equipment from Huawei and ZTE could threaten U.S. security and recommended U.S. companies not buy from them. The committee's report said Huawei's alleged government ties might allow China to install "back doors" to U.S. networks and intercept official communications.
Sprint doesn't use Huawei equipment, but Clearwire, its WiMax network partner, does. As part of the Softbank investment, Sprint plans to take control of Clearwire by buying out the roughly half of the company it doesn't already own.
"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 network," Rogers said in a statement on Thursday. "I expect them to make the same assurances before any approval of the deal in the CFIUS process. I am pleased with their mitigation plans, but will continue to look for opportunities to improve the government's existing authorities to thoroughly review all the national security aspects of proposed transactions."
Sprint and Clearwire declined to comment on Rogers' statement. Last October, Clearwire said that Huawei equipment would represent less than 5 percent of its spending on the LTE network it is now building.