Legere argues T-Mobile-Sprint merger will produce more jobs, lower prices and competition for market leaders

WASHINGTON • T-Mobile US Inc CEO John Legere (picture) said his company doesn’t use equipment from Huawei Technologies Co Ltd and won’t after buying Sprint Corp to form a bigger No 3 in the US wireless market.

“Let me be clear — we do not use Huawei or ZTE Corp network equipment in any area of our network. Period. And we will never use it in our 5G network,” Legere said in written testimony prepared for a hearing yesterday before the House communications subcommittee.

The statement is in response to critics who’ve raised the issue of the Chinese equipment maker as a risk to national security to build opposition to the proposed US$26.5 billion (RM107.81 billion) merger.

Sprint parent SoftBank Group Corp has “significant ties” to Huawei, as does T-Mobile parent Deutsche Telekom AG, according to Carri Bennet, general counsel for the Rural Wireless Association that represents smaller competitors to the merging parties. Huawei supplies Deutsche Telekom, according to data compiled by Bloomberg.

“Allowing a Japanese-influenced company and German- influenced company to merge when both have significant 5G ties to Huawei appears to run counter to US national security concerns,” Bennet said in testimony submitted for the hearing.

Lawmakers and the administration of US President Donald Trump said Huawei poses a potential security threat, if only because it can’t buck orders from China’s government, and Secretary of State Michael Pompeo this week urged Europeans to shun the Shenzhen-based company.

Huawei said it’s privately held, doesn’t take orders from the Beijing government, and wouldn’t do so because that would ruin its business that relies on income worldwide.

The Federal Communications Commission (FCC) is considering whether to effectively ban Huawei from US networks; already the company’s gear is effectively limited to small providers attracted by low prices.

Still, critics bring up Huawei and perils that are likewise ascribed to ZTE, another Chinese gear maker.

“T-Mobile, Sprint and their parent companies refuse to commit to the American public not to use the Chinese companies in building 5G infrastructure if allowed to merge,” Protect America’s Wireless, a group that has held several news conferences critical of the merger, said in a Tuesday press release. The group has refused to disclose its backers.

Legere seemed to have the group in mind.

“Opponents of the transaction have set up a shadowy group that refuses to disclose its donors, to lob allegations that this transaction will allow Huawei and ZTE into US networks,” the T-Mobile chief said in his testimony. “That’s false, and they know it is.”

A US watchdog group that checks the national security implications of deals — the Committee on Foreign Investment in the US — has approved the proposed merger, the companies said in December.

It’s not clear how much weight the security concerns will carry in the debate. Nine US senators in a Tuesday letter raised other consequences as they urged the FCC and the Department of Justice (DoJ) to kill the deal.

Problems include less competition, higher bills and lost jobs, the lawmakers said.

Legere argues that the merger will produce more jobs, lower prices and competition for market leaders AT&T Inc, Verizon Communications Inc and even cable providers such as Comcast Corp.

Sprint executive chairman Marcelo Claure in prepared testimony said the merger will give the combined company resources to build a “transformative” 5G network offering high speeds.

The decision on whether the deal can go ahead won’t rest with lawmakers, but with regulators at the FCC and DoJ, who are influenced by Congress. Wall Street seems less than sanguine: The premium, a measure of how risky traders perceive a deal to be be, has risen steadily since early October.

In Germany, Chancellor Angela Merkel’s government has ruled out an outright ban targeting Huawei. Deutsche Telekom has warned that Europe would fall behind the US and China in 5G with such a move. — Bloomberg