Blakeman to Malzberg: US Should Reject SoftBank Bid for Sprint

Friday, 24 May 2013 05:20 PM

By Todd Beamon

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Federal regulators should reject the $20.1 billion offer from SoftBank Corp. of Japan for most of Sprint Nextel Corp. because “we cannot have our infrastructure relying on foreign ownership and control,” says GOP strategist Brad Blakeman.

“There needs to be a government in America that prevents bad things from happening and not merely responds to it, or over responds, when bad things happen,” Blakeman, a former senior adviser to President George W. Bush, told “The Steve Malzberg Show” on Newsmax TV.

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“Living in a world economy, America has got to realize that our infrastructure is critical to our existence to our nation, our freedom — and if you surrender our critical infrastructure to foreign entities, then we lose control, we lose the ability to be as free as America should be and wants to be,” Blakeman said.

The Tokyo-based SoftBank is seeking 70 percent of Sprint Nextel, the nation’s third-largest cellphone carrier. It uses Chinese networking equipment that could open up U.S. networks to spying and hacking.

Dish Network Corp., the satellite TV network, has a competing, $25.5 billion offer for all of Sprint, and has raised the security issue as one reason Sprint shareholders should prefer its bid.

On Friday, New York Sen. Charles Schumer urged regulators to “use extreme caution” in reviewing SoftBank’s offer. The deal is being considered by the Treasury Department and the Federal Communications Commission.

Blakeman, who is a contributor to both Newsmax and Fox News, noted how SoftBank relies on telecommunications equipment made by Huawei Technologies of China. One of the largest makers of such equipment, Huawei’s products are widely deployed except in the U.S., where security concerns have kept it out of the running for most contracts.

SoftBank has offered to remove the Chinese-made equipment already in Sprint's network.

“What the Chinese can't do through the front door, they do through the back door,” Blakeman told Malzberg. “They partner up with an American ally like Japan — and then they realize, the Chinese, that they don't have to own American companies, they just have to merely make us reliant upon their infrastructure.

“If their infrastructure goes down, if they control our wireless infrastructure, then they pretty-much control American communication.”

Related: Schumer Says SoftBank's Sprint Deal Could Open Door to Hackers

He also noted how a company once headed by SoftBank’s founder and CEO, Masayoshi Son, agreed to pay $1.5 million to settle the U.S. Justice Department charges in 2009 that it had bribed Chinese officials for telecommunications contracts.

Son was chairman of UTStarcom Inc. (UTSI) from 1995 to 2003. According to the settlement, UTSI admitted that it paid for vacations for Chinese officials during Son’s tenure and improperly accounted for them as “training” trips.

Further, Softbank has reportedly sought to pressure investment banks into denying Dish as much as $9.3 billion in financing for its Sprint offer.

Dish has mentioned both instances in asking the FCC to essentially throw out SoftBank’s bid.

Similar concerns have been expressed in a report released by GOP Rep. Mike Rogers of Michigan, chairman of the House Intelligence Committee.

“You have some really bad actors here,” Blakeman told Malzberg.

Despite regulators being up against “a shot clock” — a 180-day period to review the deal — Blakeman said Dish’s offer should be given “a full and fair” hearing by both officials and members of Sprint’s board of directors.

“It’s not the only game in town,” he said. “There’s another suitor.

“This clock is really artificial, although Sprint and SoftBank think it's a hard-and-fast deadline. It's not, nor should it be, when national interest is concerned.”


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