The Committee on Foreign Investment in the United States, a government organization that evaluates foreign investments in the country for any possible national threats, cleared T-Mobile and Sprint for a possible merger. Apart from Committee of Foreign Investment, the Department of Justice, Department of Homeland Security, and the Department of Homeland Security gave the proposed merger a green flag. If the deal materializes, it would see the merger of USA’s third and fourth largest wireless operators in T-Mobile and Sprint. The deal between the two telecom giants is estimated to amount to $26.5 million.
A faction of investors along with consumer advocates and government officials opposed the deal stating that the merger will jeopardize the range of choices the customers have currently and will cause an increase in the prices of telecom plans. However, United States T-Mobile executive John Legere argued that the new telecom giant will lower prices substantially to attract new customers. The new entity that arises out of the merger will serve a consumer base of over 100 million which will enable it to go against the telecom giants in the American market in AT&T and Verizon.
For the deal to go through, the possible merger will still have to be approved by the Federal Communications Commission (F.C.C). The F.C.C had analyzed the proposed deal in 2014 and had rejected it elucidating that the decrease in the number of telecom operators in the country would be against the consumer interest. The deal will also be subjected to other regulatory approvals. Another major issue that creates a big hurdle in the merger is T-Mobile and Sprint networks using Huawei equipment for running their networks in the country. Lawmakers across the country have flagged the deal as a national concern owing to the companies’ ties with Huawei. A recent development has found that Huawei equipment is susceptible to spying by the Chinese government. Although both the companies are avoiding using any telecommunications equipment produced by the Chinese manufacturer, their corporate parents are generally Huawei customers. SoftBank, a major venture capitalist from Japan who holds the major stake in Sprint, was involved in conducting a presentation for demonstrating advanced 5G technology in 2017. The demonstration saw a human being competing with a robotic arm in a game of air hockey in Japan. After the arrest of top Huawei executive in Canada and the close association between SoftBank and the Chinese firm, the fear of the proposed merger being rejected looms at large. In case the proposal manages to cross all the hurdles, the deal is expected to close in the early half of 2019.