A congressman from Colorado, where Dish is based, raised similar fears during a recent House hearing.
“Do you agree that surrendering control of a critical infrastructure provider like Sprint to a foreign entity like SoftBank beyond full U.S. oversight deserves careful consideration and should not be hurried?” Rep. Cory Gardner (R-Colo.) asked an expert on the matter.
But hammering away at the issue may backfire, experts say.
When Gardner raised his question, he got an answer he probably didn’t expect to hear: Letting a foreign owner buy Sprint may be preferable to U.S. officials, because it gives them more oversight over the deal.
“So there is an odd set of incentives for the U.S. government, where they might actually have more regulatory authority if they let [the SoftBank] transaction go through,” Stewart Baker, former head of the Committee on Foreign Investment in the United States (CFIUS), the agency that reviews foreign mergers, told Gardner this week at the House Energy and Commerce Committee hearing.
Through foreign ownership conditions in CFIUS and Federal Communications Commission reviews, regulators can create rules that would stop SoftBank from buying foreign equipment for Sprint’s networks. U.S. officials wouldn’t have that degree of control if Dish were to buy Sprint and wanted to import Chinese equipment, he said.
CFIUS has yet to rule on the mega-deal, though a decision is expected within days. Some analysts watching the competition for Sprint say that if regulators approve the merger with SoftBank, Dish’s offer will become less attractive to Sprint shareholders, even though Dish offered $5 billion more. That’s because Dish’s bid came in later and faces regulatory reviews that will take months.
Dish’s campaign against SoftBank appears more like a last-ditch effort to use its influence in Washington, some analysts say. Dish has been on a buying spree, snatching up bankrupt Blockbuster and LightSquared, in a scramble to transform itself from a television service provider to an Internet and mobile powerhouse.
“There’s ample evidence to suggest these 11th-hour rumblings are misleading byproducts of a U.S. government review that’s nearing completion,” said Jeffrey Silva, a telecom and media industry analyst at Medley Global Advisors.
The concerns voiced by lawmakers, including Sen. Charles E. Schumer (D-N.Y.), focus on SoftBank’s business relationship with Huawei, a Chinese telecom equipment maker that has been under scrutiny by the House Intelligence Committee.