It looks like the merger of T-Mobile with Sprint could get ensnared in the national security debate related to Chinese vendors such as Huawei and ZTE.
Some groups last week filed comments with the Federal Communications Commission (FCC) about the merger, and they cited security concerns related to the non-U.S. based ownership of Sprint and T-Mobile. Sprint is 84 percent owned by Japan-based SoftBank, and T-Mobile is 63 percent owned by its parent company Germany-based Deutsche Telekom.
The Communications Workers of America (CWA), which is a union for the wireless industry, filed a statement with the FCC arguing that a T-Mobile merger with Sprint would cost jobs. But as part of its argument, it suggested the merger might jeopardize national security. The CWA statement said T-Mobile and Sprint “conveniently ignore the extensive ties between [their] parent companies and Chinese government-owned entities.” The statement also noted “U.S. lawmakers’ continued characterization of Huawei as a national security threat.”
Another group, the American Federation of Labor and Congress of Industrial Organizations (AFLCIO), filed comments saying that the parent companies of T-Mobile and Sprint both have track records of using telecommunications equipment manufactured by Chinese firms that may contain security risks. “The House Select Committee on Intelligence has warned about potential national security threats in using equipment made by Chinese firms, especially Huawei Telecommunications Company and ZTE Corp., in U.S. telecommunications networks,” stated the AFLCIO.
The group said Deutsche Telekom has significant ties to Huawei, and both Sprint and its majority owner SoftBank have built networks using equipment from Huawei and ZTE.
Both the AFLCIO and the CWA have a vested interest in protecting U.S. telecommunications workers’ jobs, and they are making arguments that the merger would have a detrimental effect on workers. But connecting T-Mobile and Sprint to possible security risks related to China is a new angle that could have an impact on the deal.
Ironically, T-Mobile and Sprint have been arguing that their merger would help the United States in its race to 5G against China.