The Department of Justice asked the FCC to wait for the Justice Department to check out Japanese operator Softbank's proposed $20.1 billion acquisition of 70 percent of Sprint Nextel (NYSE:S) because of ongoing investigations into "national security, law enforcement, and public safety issues." The request is described as routine and is in response to a foreign company (Softbank, which is based in Japan) seeking ownership of a U.S. telecommunications provider.
The Justice Department said the FBI and Department of Homeland Security are also conducting investigations and that they are requesting that the commission "defer action" until they notify the FCC that their reviews are complete, "and, based on the results of such reviews, request appropriate action by the commission."
Sprint and Softbank have urged the FCC to approve the deal, arguing that the deal is in the public interest and will increase U.S. wireless competition. The companies have told the FCC that the deal "offers the potential to transform the U.S. wireless marketplace by creating a more vibrant rival to compete with today's two predominant wireless providers, Verizon Wireless (NYSE:VZ) and AT&T (NYSE:T)." Sprint is also seeking approval of its offer to buy Clearwire (NASDAQ:CLWR).
"This a routine request so the appropriate federal agencies can review network security issues for transactions involving foreign companies," Sprint told CNET. "We continue to anticipate that the transaction will be completed in mid-2013."
Indeed, the Justice Department sent an identical letter to the FCC in November regarding T-Mobile USA's proposed merger with MetroPCS (NYSE:PCS). T-Mobile is owned by Germany's Deutsche Telekom.
In related news, Dish Network (NASDAQ: DISH) said in an FCC filing it does not intend to comment on Softbank's proposed transaction with Sprint due to "uncertainty surrounding the ownership of Clearwire" and Dish's continued efforts to acquire Clearwire assets. Dish said it plans to file comments on the Sprint-Softbank transaction in the future.
- see this letter (PDF)
- see this Bloomberg article
- see this CNET article
- see this separate CNET article
Dish urges FCC to halt review of Softbank/Sprint deal
Dish trumps Sprint with surprise bid for Clearwire
Clearwire investor Crest to urge FCC to block Sprint/Clearwire deal
Sprint to buy Clearwire for $2.2B
Softbank to buy 70% of Sprint for $20.1B
Article updated Jan. 30 to clarify the nature of the Justice Department's request.