Consumers and industry figures alike were surprised to find out about the merger between T-Mobile and Sprint. However, analysts suggest there might be more juicy bits to the story at hand, as Sprint’s relationship with Chinese company Huawei might be a new source of conflict.
It appears the ties of Sprint with Chinese-based Huawei might fully complicate the merger of Sprint and T-Mobile. It can be remembered that Sprint has majority ownership from folks at SoftBank in Japan, which then works with the Chinese-based telecom giant Huawei.
This potentially-alarming news is courtesy of Bloomberg, which said congressional lawmakers have expressed their intention to convince United States President Donald Trump to observe the proposed merger between T-Mobile and Sprint, with the latter having ties to the Chinese government.
It’s important to remember though that Sprint doesn’t have direct relations with Beijing. Rather, SoftBank in Japan has majority ownership to the United States telecom, with SoftBank having worked with Huawei, as in the Chinese telecommunications giant. It can be remembered that aside from ZTE (the other big Chinese telecom), Huawei has been regarded as a “national security threat” by the Trump administration. Some intelligence agencies and even the Department of Defense have banned the usage of equipment and phones from Huawei in the military. In fact, the ZTE was almost nearly shut down in a trade ban that spanned a huge portion of the country.
A draft letter to be sent to Steve Mnuchin, Treasury Secretary, said that it should be recognized that these companies, referring to Sprint and its “associates,” closely operate as “subsidiaries” of firms owned outside the country. It’s to be noted that companies like SoftBank has long-standing ties with state-influenced entities working in China, and therefore should be the subject of a national security investigation.
The letter to Mnuchin is significant, given he’s the one overseeing the national security portion of the T-Mobile and Sprint deal. The letter itself was penned by critics of the deal in Congress, and has now started circulating in the House of Representatives.
According to various critics, the relationship between Softbank and Huawei may pose a huge threat to the development of wireless technology in the next generation. This is because SoftBank will be owning 27-percent of the entity that would be the result of the Sprint and T-Mobile merger. The letter added the merger between Sprint and T-Mobile would increase the risks the United States would have with third-party foreign entities in terms of communication – especially when it comes to using them in the development of 5G infrastructure in the United States.
According to the letter, SoftBank and Huawei are in cahoots to use developments in 5G technology to power a lot of Asia’s service robots. Also, one of the many foundational arguments Sprint and T-Mobile have for the merger in the first place is that it would help push for the United States’ ability to deploy huge networks of 5G technology in order to compete with telecoms in the Asia region.
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