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Over the weekend, the boards of both Sprint and Softbank agreed to terms under which the Japanese wireless carrier would acquire a 70% equity interest in Sprint, providing substantial cash infusion into Sprint.  In light Deutsche Telekom’s controlling interest in T-Mobile and Vodafone’s longstanding ownership interest in Verizon Wireless and that Sprint is often regarded as a distant 3rd to AT&T and Verizon Wireless in the domestic Wireless market, the real question is not whether this transaction will be approved, but when.

The merits of the proposed transaction likely will be assessed for months, if not years.  The proposed deal is consistent with the trend of global companies owning Wireless companies in multiple countries. We expect that the parties will submit one or more transfer of control applications with the FCC within a month.  The proposed deal likely will receive the full attention of the FCC’s Transaction Team.  The extent of DoJ or FTC review of the transaction will be determined in the near future, as well.

One reference point for the criteria the FCC will use in assessing the Softbank’s investment in Sprint is the FCC’s Foreign Ownership Guidelines.  More importantly, the proposed transaction should benefit from the less restrictive approaches to assessing foreign investment in domestic Wireless ventures set out in the agency’s Foreign Ownership Review  proceeding.   Therein, the FCC recommended a series of reforms to minimize burdens on foreign investment in domestic Wireless entities and streamline agency decision making under Section 310 (b)(4) of the Communications Act, consistent with “national security, law enforcement, foreign policy, and trade policy considerations.”  The proposed transaction also benefits from the FCC’s recent decision to facilitate non-controlling investments by foreign entities in U.S. Wireless carriers.

Again, it is difficult to see the transaction being rejected or made subject to onerous conditions, although some parties may raise questions regarding the aggregate spectrum holdings of Sprint and Clearwire in which Sprint is a major stockholder.