The Committee on Foreign Investment in the U.S., an interagency panel that reviews deals for national security concerns, would certainly review the transaction. But would it oppose the deal?
Certainly there will be lawmakers in Congress and pundits on television arguing against a transaction. The deal would partially resemble the controversy on Capitol Hill that surrounded Deutsche Telekom AG's 2001 acquisition of VoiceStream Wireless to create T-Mobile USA Inc. At the time there were twice as many large U.S. cellular companies as now, and yet there was major opposition to the transaction, which ultimately got approved. Now there are four national mobile-phone companies, and with the pending acquisition of Alltel Corp. by Verizon Wireless, another major regional licensee disappears. Additionally, Sprint Nextel's iDen wireless network is used by public-safety workers, something that may worry some Washington security officials, particularly in an election season, which is right around the corner. The heightened scrutiny that comes in a post-DP World world is not something that should be ignored.
But despite the opposition, there is a way the transaction gets done. For one thing, South Korea, a U.S. ally, is not China or Dubai for that matter. Dubai may not be a problem -- it depends on whether it is the political silly season. (The country has gotten approval for deals since DP World's rejection: The Carlyle Group got U.S. government OK to sell off its aviation services holdings to state-owned Dubai Aerospace Enterprise in 2007.)
A number of high-profile, controversial, similar transactions involving Asian telecom companies with ties to governments have been approved by CFIUS with conditions. In 2005, CFIUS approved India's Videsh Sanchar Nigam Ltd.'s sale of fiber-optic cable assets from Tyco International Ltd. with conditions. The Tyco system controls a communications grid that the U.S. military relies heavily on. VSNL signed a network security agreement with the U.S. Justice Department. In 2003 China's Hutchison Whampoa Ltd., a Hong Kong-based conglomerate controlled by Li Ka-shing, abandoned its joint bid with Singapore Technologies Telemedia Pte. Ltd., to buy a controlling stake in the bankrupt telecom provider Global Crossing Ltd. However, Singapore TT got approval after it set up a proxy board with more than half of Global Crossing's directors made up of prominent American citizens, including those with ties to the U.S. defense establishment.
Conditions like these could be put in place in an SK Telecom-Sprint Nextel deal, but first there would be a lot of noise -- in both a Democratic or Republican administration. - Ron Orol
Ron Orol is a Washington-based reporter for The Deal and author of Extreme Value Hedging: How Activist Hedge Fund Managers Are Taking on the World.
Comments
As rumors persist about a possible bid by South Korea's SK Telecom Co. Ltd. for Sprint Nextel Corp., thoughts turn to how the U.S. government might react. 
Please do not sell Sprint to SK Telecom... When they owned Helio they were the biggest crooks and I saw many dealers go bankrupt because of the theft of comission from HELIO a Korean company. Sprint please do not sell.