Sprint Nextel has reportedly dropped Huawei and ZTE from its LTE tender – one of the world’s biggest telecom contracts this year – after fresh government objections on security grounds.
The Chinese vendors have been excluded even though they submitted the lowest bids, and some of the highest competing offers overshot Sprint's maximum target by over $1.5 billion, sources told the Wall Street Journal.
The decision came after commerce secretary Gary Locke became the latest in a line of US politicians to weigh in on the deal, personally calling Sprint's CEO Dan Hesse to discuss security concerns, the sources said.
But Locke had stopped short of requesting outright for Hesse to ban the vendors.
Sprint Nextel set a target range of between $5 billion and $7 billion for the LTE network tender, but some of the highest bids from the still-eligible vendors would reportedly put the cost at $8.5 billion.
A shortage of electronics components has been blamed for the discrepancy.
Samsung, Alcatel-Lucent and Ericsson have also bid. While Sprint originally planned to sign on three suppliers, the company is said to be renegotiating with Samsung and Alcatel-Lucent, seeking a better deal for a bigger chunk of the work.
Sprint Nextel has been under pressure for some time to restrict Chinese vendors' participation in the deal. In October, former vice-presidential candidate Joe Lieberman and three other politicians wrote to the FCC asking the regulator to intervene.
In August, eight US senators penned a letter to administration officials arguing that Huawei's participation should be blocked because of its alleged ties with the Chinese military. CEO and co-founder Ren Zhengfei is a former PLA officer.
That letter also claimed Huawei had previously supplied regimes including the Taliban and Saddam Hussein's Iraq.
Huawei has hired top Washington lobbyists to win administration and congressional support, but so far has yet to win a major contract from a tier-one US operator.