The decision to shun Huawei telecom gear, the # telecom gear maker in the world after Ericsson, is part of its assurance to lawmakers to get the green signal for Sprint Nextel’ association with Japanese telecom giant SoftBank.
The Chinese gear maker will be under pressure to do business with American telecom operators if such assurance takes place.
Sprint’s capital expenditure in 2012 was less than $6 billion. In first nine months of 2012, Sprint spent $3.447 billion as Capex, up 76 percent from the same period last year’s $1.955 billion.
Sprint owns a majority share of its wireless partner Clearwire and may replace Huawei telecom equipments.
Bloomberg reports that Clearwire uses gear from Huawei at the edge of its network, and its core network is supplied by domestic vendors such as Cisco Systems and Ciena. Clearwire is materially reducing Huawei’s presence in its network that delivers high-speed wireless service.
Sprint Nextel and its Japanese suitor, SoftBank, have assured lawmakers that they would not use equipment from China’s Huawei Technologies in Sprint’s cellphone network.
Representative Mike Rogers, the chairman of the House intelligence committee, said that both Sprint and SoftBank of Japan had pledged not to use Huawei equipment in the existing Sprint network. The two also said they would move to replace Huawei products in the network of Clearwire, a high-speed data service provider that Sprint is in the process of acquiring.
Rogers added that he expected both companies to make similar assurances to the Committee on Foreign Investments in the United States, a government body that oversees national security concerns in business transactions.
“I am pleased with their mitigation plans, but will continue to look for opportunities to improve the government’s existing authorities to thoroughly review all the national security aspects of proposed transactions,” he said in the statement.
The statement by Rogers highlights one of the government’s concerns about Sprint’s sale of majority control to SoftBank for $20.1 billion. SoftBank, one of Japan’s biggest cellphone service providers, uses equipment from two Chinese manufacturers, Huawei and ZTE, in its own networks.
American intelligence agencies are apprehensive about doing busienss Huawei and ZTE.
The U.S. government should block acquisitions or mergers by Huawei and ZTE, China’s phone-equipment makers, Rogers’ committee said a report in October. It said the companies’ equipment can provide an opening for Chinese intelligence services to use U.S. telecom networks for spying.