SoftBank said to be in talks with US to allay national security fears

The Japanese company will allow the U.S government to approve a director on the Sprint Nextel board tasked with monitoring security issues

The U.S. government is in negotiations with SoftBank for greater control over equipment purchases by Sprint Nextel and the selection of one of the Japanese company's nominee to the U.S. carrier's board, according to a news report.

Dish Network, SoftBank's rival bidder for Sprint, has meanwhile launched an advertising campaign and a website to argue that "the sale of wireless and wireline infrastructure with national strategic importance to a foreign company will weaken the security of the United States."

SoftBank has agreed to give the U.S. government the right to approve one of the directors it names to Sprint's board, who will be responsible for overseeing national security issues, The Wall Street Journal reported Wednesday, citing people familiar with the matter.

The government also wants the right to approve some of Sprint's equipment purchases and wants the removal of Chinese equipment from the network of Clearwire, a Sprint affiliate that it intends to acquire, the newspaper said.

SoftBank said in October last year that it had reached a deal to acquire a 70 percent stake in Sprint for US$20 billion. Dish, a satellite TV service provider, made a $25.5 billion counter-bid to acquire Sprint last month.

Sprint Nextel said Tuesday it received permission from SoftBank to negotiate with Dish, but said it had not changed its recommendation with regard to the SoftBank offer. SoftBank said it believed that its offer was superior than the one from Dish, and anticipates closing the deal on July 1 or soon after, subject to meeting closing conditions.

Dish has, however, raised the national security issue a number of times to argue its case against SoftBank. It has told the Federal Communications Commission, for example, that a Sprint-SoftBank deal would put more U.S. spectrum than anyone else holds in the hands of a single, foreign-owned company.

This is a theme Dish returned to on its website where among other charges, it states that without "U.S. ownership and control of Sprint, SoftBank's reliance on Chinese equipment manufacturers raises significant national security concerns."

Sprint shareholders are scheduled to vote on SoftBank's bid on June 12.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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