SoftBank’s Bid for Sprint Nextel One Step Closer with National Security Approval

Michael Teague  |

Japanese telecom firm SoftBank Corporation’s attempted $20.1 billion buyout of Sprint Nextel (S), the U.S.’s third largest wireless carrier, has crossed one more hurdle on its way to approval.

Last Friday, Senator Chuck Schumer (D-NY) raised some eyebrows when he became one of the most vocal participants in a campaign to paint the proposed deal as a potential threat to national security.  That is an effort that is actually being led by a rival bidder for the deal, Dish Network Corp. (DISH), who has gone as far as to take out advertisements in the Washington Post, Politico, and other publications, and has even devoted an entire website to the cause of stopping the deal based on fears about the nation’s security.

Concern ostensibly comes from the fact that SoftBank, while a Japanese firm, has business dealings with the Chinese firm Huawei Technologies Inc., who is one of its suppliers. Dish Network was likely counting on increased scrutiny being given to the matter, with a great deal of recent media hysteria over the past few months centering on Chinese government-dispatched hackers accessing all sorts of sensitive U.S. government, military, and corporate data.

Schumer is not the only elected representative to take sides, wittingly or otherwise, in the deal, as John McCain (R-AZ), always with an eye on the national security interest, has also come out as a skeptic.

Still, Schumer has a unique history of scuttling business deals based on fears about the intentions of “outsiders”.  It was he who led the successful bid to end the attempts of Dubai Ports World to purchase the ports of New Jersey and New York in 2006, even going as far as to call a press conference to which he invited the families of 9/11 victims to join him in opposing the sale.

While fully two of the 19 hijackers on 9/11 were from the United Arab Emirates, an oil-monarchy in the Arabian Peninsula where Dubai is only one of seven emirates, not to mention a staunch U.S. ally in the region, the allegation of connections between SoftBank and malicious Chinese government intentions are more tenuous still.  And as of Tuesday, it was starting to seem as though the Federal Government thought so as well.

The Committee on Foreign Investment in the U.S. is reportedly on the verge of letting SoftBank and Sprint know that it has no unresolved national security concerns related to the deal. This is likely due in no small part to the fact that SoftBank has proven itself incredibly willing to cut ties with Chinese companies, including Huawei, going so far as to offer to dismantle equipment it has already purchased, at a cost of up to $1 billion.  The Japanese firm has also given the U.S. government veto power over one Sprint board nominee.

Dish Network, meanwhile, whose site’s sole purpose is to portray SoftBank as a Chinese Trojan Horse, makes absolutely no mention of the rival bidding going on behind all of its zealous concern for the wellbeing of the nation, though it does make clear that it was “paid for by DISH Network”.  Dish wants Sprint so badly that it has bested SoftBank’s last official offer with its own $25.5 billion counter-offer.

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