Softbank to rip out Huawei gear if it achieves control of Clearwire; offers US govt seat on board

24 May 2013

Japan’s Softbank Corp says that if wins control of Sprint Nextel, it will remove all equipment installed by Chinese vendor Huawei that Sprint affiliate Clearwire uses in its network infrastructure. The Wall Street Journal (WSJ) reports that the Japanese giant is willing to foot the USD1 billion bill in an effort to please US authorities; a government report last year found that Huawei and ZTE pose a potential security risk because their equipment could be used for espionage purposes. Clearwire has previously indicated that Huawei’s gear is deployed at the edge of its network, while its core network equipment is provided by domestic vendors Cisco and Ciena.

In related news, Softbank CEO Masayoshi Son is reportedly willing to let the US government choose one of the ten directors to its board in a bid to allay US security concerns. The WSJ has suggested that the director in question will be responsible for overseeing national security issues. The development comes at a time when rival Sprint suitor DISH Network is attempting to derail Softbank’s bid with an aggressive PR campaign against its Japanese opponent, running full-page colour adverts in publications such as the Washington Post, Politico and The National Journal, comparing Softbank’s proposal to acquire Sprint to the 2006 controversy surrounding Dubai Ports World’s ownership of various ports on America’s eastern seaboard.

Meanwhile, Reuters reports that Sprint and Softbank have received all necessary state regulatory approvals for the Japanese company’s proposed USD20.1 billion purchase of 70% of the former. The California Public Utilities Commission voted on Thursday to approve the deal, according to the companies, which said this was the final state approval required for the transaction. However, the companies are still working with the Federal Communications Commission (FCC) and other government agencies who are reviewing the transaction.

United States, Clearwire, DISH Network, Huawei Technologies, SoftBank Group Corp, Sprint Corporation (now part of T-Mobile US)