U.S. to review equipment purchases to approve Sprint deal - WSJ

March 28 Thu Mar 28, 2013 2:42am EDT

March 28 (Reuters) - The U.S. government is seeking oversight of network equipment purchases as a condition to approve the $20 billion takeover of Sprint Nextel Corp by Japanese mobile carrier Softbank Corp, the Wall Street Journal reported, citing people familiar with the matter.

The government is expected to require the companies to notify it when they plan to buy equipment for the core of their network and to cooperate if any national security or public safety considerations arise, the people told the paper.

Chinese telecommunications equipment suppliers like Huawei Technologies Co Ltd, the world's second-largest maker of routers and other telecom gear, and ZTE Corp, the fifth largest, have been blocked out from making big inroads into the United States due to national security concerns.

Sprint and Softbank are willing to forgo use of Huawei and ZTE gear in the core of their U.S. network, said a person who has spoken with Sprint to the Journal, even though trade rules cannot prohibit purchases from these companies.

"The adoption of such a policy would seem little more than a market-distorting political or protectionist exercise," Huawei spokesman William Plummer told the Journal, referring to a review of equipment purchases that could exclude Huawei.

The U.S. House of Representatives' Intelligence Committee in October warned that Beijing could use equipment made by Huawei and ZTE to spy on certain communications and threaten vital systems through computerized links. But a White House-ordered review the same month found no clear evidence that Huawei had spied for China, two people familiar with the probe told Reuters.

Congress recently added a new cyber-espionage review process for U.S. government technology purchases into the funding law signed this week by President Barack Obama.

ZTE Corp had no immediate comment on the Journal report when contacted by Reuters.

Sprint, Softbank and the U.S. office of Huawei could not immediately be reached for comment by Reuters outside of business hours.

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