SoftBank grants US government the right to approve Sprint director

If takeover plans by SoftBank and Sprint are finalized, then SoftBank will give the U.S. government influence due to security concerns.


SoftBank plans to give the U.S. government control over Sprint's board of directors should the takeover bid for Clearwire go ahead.

First reported by The Wall Street Journal, a concession will be made to the U.S. government in light of security concerns raised over networking security. The government will be allowed to nominate one member of Sprint's board in order to oversee national security issues and ensure that the firm complies with security protocols being negotiated with federal agencies.

Citing sources familiar with the matter, the publication says that the government is also hoping to be permitted the right to approve Sprint's future equipment purchases -- and wants Chinese products, such as those produced by Huawei, removed from the network of one of Sprint's affiliates, Clearwire.

Softbank CEO Masayoshi Son told U.S. House Intelligence Committee Chairman Mike Rogers that the company would comply. Clearwire uses Huawei radio base stations to cope with data transfer and phone calls, but the Chinese manufacturer's products are not core to the carrier's operations. Removal and replacement of this equipment could cost the firm up to $1 billion.

The U.S. government has made its mistrust of both Huawei and ZTE equipment known. The House of Representatives' Intelligence Committee released a report last year which cautioned U.S. businesses to avoid using the firm's products, citing fears that malicious code could be built into networking equipment.

Sprint is one of several contenders vying to purchase struggling carrier Clearwire. Sprint has offered $3.40 a share -- as majority shareholder SoftBank recently lifted a bid cap of $2.97 a share -- and this is the Sprint's "best and final offer." However, satellite provider Dish Networks has also made a pass for the firm, offering $3.30 a share. The acquisition would give the companies additional subscribers and spectrum resources.

Dish has also made an offer to buy Sprint for $25.5 billion.

Sprint shareholders plan to vote on the deal in June.