S/TMUS: CFIUS Review Likely to Begin After Completion of Team Telecom Review and Will Have Broader Focus

Event Driven Takeaways

  • CFIUS review of the proposed Sprint/T-Mobile merger will likely begin after the completion of the Team Telecom review and will be more expansive in scope under CFIUS’s broader and newly-expanded authority.
  • Heath Tarbert, Assistant Secretary of Treasury who oversees CFIUS, told Event Driven that CFIUS works “in tandem” with Team Telecom. “Team Telecom has a lot of authorities that they use, so we look to them first,” he said. “But then, if there are certain tools that they don’t have, then we rely on CFIUS to address those residual issues.”
  • CFIUS has experience with Sprint’s owner, Japan’s SoftBank, and has repeatedly imposed mitigation agreements on SoftBank to limit the company’s access to or control of U.S. technology. Not only was there an extensive mitigation agreement surrounding SoftBank’s acquisition of Sprint in 2013, but CFIUS limited SoftBank’s operational control over Fortress Investment Group as a condition of approving the acquisition in 2017.
  • The enhanced powers granted to CFIUS with the enactment of the Foreign Investment Risk Review Modernization Act, especially as it relates to joint ventures, greenfield investments and real estate transactions, will likely lead to the inclusion of those types of transactions in any mitigation plan imposed on Sprint and T-Mobile by the national security panel.
  • While agencies may utilize some of the same personnel in both CFIUS and Team Telecom reviews, the elements of the reviews are different. CFIUS will tackle the merger’s additive risk to national security, while Team Telecom will focus on any foreign ownership of U.S. telecommunications infrastructure. Team Telecom reports to the FCC, from which it receives its authority; CFIUS’ review is separate and the panel is answerable directly to the President.

The CFIUS review of Sprint and T-Mobile’s planned merger will likely begin after Team Telecom has completed its review of the deal, according to CFIUS and Team Telecom practitioners. Although the Team Telecom review may take as long as a year, the CFIUS review will be extensive in its own right, as the merger touches on a number of typical areas that raise CFIUS scrutiny, including essential and emerging technologies, foreign relationships with Chinese technology firms, ownership of real estate and telecom infrastructure and access to perso