Last night, Bloomberg reported T-Mobile CEO John Legere will tell lawmakers that the “new T-Mobile” will not use equipment from the Chinese telecom giant with a history of hacking and cyber espionage. But here’s what Mr. Legere is not saying about the “new T-Mobile” and Huawei:
- Mr. Legere is only making a vague pledge to not use Huawei equipment, lawmakers and regulators should require specific, enforceable commitments.
- No one in the U.S. wireless industry has a closer relationship to Huawei than T-Mobile. Their parent company, Deutsche Telekom, is working with Huawei to deploy 5G around the world and defending Huawei against our closest allies—recently arguing that abandoning the Chinese supplier would reportedly delay European 5G deployments by two years.
- Given the week’s Huawei indictments originating with theft of T-Mobile intellectual property, T-Mobile and Deutsche Telekom should know better than anyone that we can’t trust Huawei. But instead of being the leaders of the boycott, Deutsche Telekom is now encouraging further use of Huawei products around the world.
- Deutsche Telekom’s close relationship and global procurement of Huawei products provides essential capital to Huawei that aids and abets China’s aspirational dominance in 5G technologies. The synergies and profits from this transaction will flow directly to Deutsche Telekom to support Huawei around the globe regardless of whether T-Mobile USA installs Chinese equipment in its domestic deployments.
- Mr. Legere is not making assurances that Deutsche Telekom—who will own 42 percent of the “new T-Mobile”—will not use Huawei equipment in any deployment around the world. If Deutsche Telekom continues to back Huawei, there may not be safe alternatives for wireless technology in the future.
Follow Protect America’s Wireless at @SafeWireless for live fact checking during today’s hearing.
By Todd Shields
February 12, 2019
T-Mobile US Inc. Chief Executive Officer John Legere says his company doesn’t use equipment from Huawei Technologies Co., and won’t after buying Sprint Corp. to form a bigger No. 3 in the U.S. wireless market.
“Let me be clear –- we do not use Huawei or ZTE 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 Wednesday 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 $26.5 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 U.S. national security concerns,” Bennet said in testimony submitted for the hearing.
Lawmakers and the administration of President Donald Trump say 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 says 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 is considering whether to effectively ban Huawei from U.S. 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 Corp., 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 U.S. networks,” the T-Mobile chief said in his testimony. “That’s false, and they know it is.”
A U.S. watchdog group that checks the national security implications of deals -- the Committee on Foreign Investment in the U.S., or Cfius -- 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 U.S. senators in a Tuesday letter raised other consequences as they urged the FCC and Justice Department 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 Justice Department, 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 U.S. and China in 5G with such a move, according to people familiar with an internal briefing paper from the company.
Follow Protect America’s Wireless (@SafeWireless) for real-time updates on why we must protect our networks from foreign spying.