T-Mobile and Sprint merger officially cleared by US national security panel, still needs FCC & DOJ approval

It was reported on Friday that T-Mobile and Sprint would likely receive approval from U.S. national security officials for their $26 billion merger. The Wall Street Journal reports that T-Mobile was granted approval for its takeover of Sprint today after “several months of negotiation with company representatives.”

The approval comes from the Committee on Foreign Investment in the U.S., or Cfius. The committee is led by the Treasury Department and is tasked with reviewing foreign deals for national security concerns. It can recommend the president block potential deals if such issues are uncovered.

In the case of the deal between Sprint and T-Mobile, Cfius is obligated to review details because T-Mobile’s majority owner is Deutsche Telekom, which is Germany-based. Meanwhile, Sprint’s parent, SoftBank Group, is Japan-based.

Friday’s report stated that approval of the deal was contingent upon both parent companies agreeing to reduce their use of Huawei devices. Today’s report notes that Cfius previously required Sprint to remove Huawei equipment from its U.S. network in 2013 when SoftBank purchased a controlling stake in the carrier. Deutsche Telekom went through a similar process when it entered the U.S. market.

This time around, however, neither Deutsche Telekom nor SoftBank are required to “significantly change its business or operations” as a result of the Cfius review. Changes are limited to T-Mobile, Sprint, and their subsidiaries, the report says:

Neither Deutsche Telekom nor SoftBank is required to significantly change its own business or operations as a result of Cfius’s demands, according to the terms of the merger. Any potential changes are limited to T-Mobile, Sprint and their respective subsidiaries, deal documents show.

Of note, Cfius has no insight into the networks overseas of Deutsche Telekom and SoftBank.

Approval by Cfius is only the next step in the approval process for the T-Mobile and Sprint deal. The takeover still needs approval from antitrust officials including the FCC and DOJ. The FCC review just recently resumed after a brief delay in September. The deal faces pushback from several parties who fear it would reduce competition, cost thousands of jobs, and more.

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