SoftBank Corp would appoint a "security director" to Sprint Nextel Corp's board if its takeover bid succeeds and give the U.S. government right of approval on the appointment in hopes of easing national security concerns raised by the proposed deal.
Sprint (Overland Park, KS, USA) said in a filing with the U.S. Securities and Exchange Commission on May 1 that the new director appointed by Tokyo-based SoftBank would oversee public safety concerns related to Sprint's wireless and wireline operations.
Chinese telecommunications equipment suppliers like Huawei Technologies Co Ltd (Shenzhen, China), the world's second-largest maker of routers and other gear, and ZTE Corp (Shenzhen, China), the fifth largest, have been blocked from making big pushes into the United States due to the national security concerns.
Dish Network Corp (Meridian, CO, USA), SoftBank's rival for Sprint, is running a campaign against the Japanese firm, seeking to convince lawmakers and government reviewers that the deal poses national security risks.
SoftBank said it is committed to using only network equipment that is acceptable to the U.S. government and would not use equipment from Huawei on Sprint's network. Dish has not made such promises.
The proposal for a security director was first reported by the Wall Street Journal, which said the move could cost the company up to $1 billion.
The newspaper also reported that it was unusual for officials to exert such broad influence over how a company is run, citing people who follow such deals.
Sprint declined to comment. SoftBank could not be immediately reached for comment.
Dish, in line with its public relations campaign, said in a statement that "these reported steps do not adequately protect our national security interests." Dish added that it has concerns about the security of Sprint's "critical fiber backbone network," as well as Sprint's contracts with government agencies, law enforcement and defense customers.
(Reporting by Sakthi Prasad and Krithika Krishnamurthy in Bangalore; Editing by Daniel Magnowski and Jeffrey Benkoe)