The U.S. Department of Justice and the Department of Homeland Security have asked for more time to consider Softbank’s proposed takeover of Sprint Nextel, a move that may signal a rough road ahead for the $20 billion deal.
In a letter to the Federal Communications Commission, dated Monday, the DOJ asked the FCC to defer action on the deal because it hasn’t finished reviewing the proposal for national security, law enforcement and public safety issues. It filed the letter in conjunction with the Federal Bureau of Investigation, which is part of the DOJ, and the Department of Homeland Security. The DOJ asked that the FCC hold off until the agencies have finished their review and requested FCC action. The filing was reported earlier Tuesday by GigaOm.
The letter didn’t change Sprint’s forecast for completion of the deal.
“This is a routine request so the appropriate federal agencies can review network security for transactions involving foreign companies. We continue to anticipate that the transaction will be completed in mid-2013,” Sprint spokesman Scott Sloat said in an email message. The FCC had no comment on the letter.
Last October, Softbank proposed investing $20 billion in Sprint and acquiring a 70 percent stake in the company. Though Japan is considered a close U.S. ally, some observers have said lawmakers might object to significant foreign ownership of Sprint, the third-largest U.S. mobile operator.
If approved, the deal would greatly strengthen Sprint to better compete against AT&T and Verizon Wireless. It would also allow Sprint to buy out the rest of partner company Clearwire and gain access to that company’s large reserves of wireless spectrum. But those plans have faced some opposition from other carriers, and Dish Network has made a higher counteroffer for Clearwire.
T-Mobile USA is owned by Germany’s Deutsche Telekom, and Verizon Wireless is a joint venture between Verizon Communications and U.K.-based Vodafone.