Exclusive: T-Mobile, Sprint, see the U.S. security approval for the deal after Huawei concessions-sources

WASHINGTON/NEW YORK (Reuters) – T-Mobile US Inc and Sprint Corp expect their merger to be approved by the AMERICAN national security panel as early as next week, after their respective parent companies, said they would consider curbing the use of the equipment from China’s Huawei Technologies, people familiar with the matter told Reuters.

FILE PHOTO: People walk past a Huawei store in Beijing, China, December 11, 2018. REUTERS/Thomas Peter/Photo File

The U.S. government officials are pushing T-Mobile’s German owner, Deutsche Telekom AG, to stop the use of Huawei equipment, the sources said, over concerns that Huawei is controlled by the Chinese state and the network equipment could contain “back doors” that could enable cyber espionage, something that Huawei denies.

That pressure is part of the national security review of T-Mobile’s $26 billion deal to buy US rival Sprint, the sources said.

The Committee on Foreign Investment in the United States (exhorting cfius) is conducting a national safety review of the Sprint deal, which was announced in April. The negotiations between the two companies and the U.S. government have not yet been completed and a deal can still get through, the sources warned.

T-Mobile and Sprint shares were both down 1.2 percent on Friday.

Like all large U.S. wireless carriers, T-Mobile and Sprint will not use Huawei equipment, but their parent companies use some Huawei gear in the overseas markets.

Sprint parent, SoftBank Group Corp, plans to replace the 4G-network equipment from Huawei with the hardware of Nokia and Ericsson, Nikkei reported on Thursday, without quoting sources.

Deutsche Telekom, Europe’s largest telecom company, on Friday said that the rate of its supplier plans in Germany and other European markets where it is active, given the debate about the safety of the Chinese network gear.

Huawei has said that the security concerns are unfounded. The tensions are increased by the arrest of Huawei’s chief financial officer in Canada for possible extradition to the United States.

Sprint, T-Mobile, Deutsche Telekom, SoftBank, and exhorting cfius declined to comment.

The Ministry of Justice and the Federal Communications Commission must also approve the proposed deal. T-Mobile previously said that it expects the deal to close in the first half of the year 2019. The United States is the use of the influence of the pressure of companies all over the world to cast Huawei as a supplier, even when it comes to their overseas operations, it wants primacy over China in 5G wireless technology. Huawei is the world’s largest network equipment maker, ahead of Ericsson and Nokia. New Zealand and Australia have stopped telecom operators use Huawei equipment in the new 5G networks because they are concerned about the possible Chinese government involvement in their communication infrastructure.

(This story corrects to show U.S. wireless carriers not to use Huawei equipment, but are not prohibited from doing so)

Reporting by Greg Roumeliotis and Liana Baker in New York, Diane Bartz in Washington; Writing by Chris Sanders; Editing by Bill Rigby

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