Summary:

The Justice Department is raising security questions over the Sprint-Softbank deal, and has asked the FCC to defer any action on the deal until it and other government agencies complete their review.

The U.S. Department of Justice apparently has security concerns about Japanese carrier Softbank’s $20.1 billion bid to take over Sprint, and is asking the Federal Communications Commission for more time to look into the deal.

In a short letter filed with the FCC Tuesday morning, Jennifer Rockoff, attorney advisor for the DOJ’s National Security Division, asked the FCC to defer any action on the deal:

“DOJ, [Department of Homeland Security], and FBI (“the Agencies”) are currently reviewing this matter for any national security, law enforcement, and public safety issues but have not yet completed that effort.  We therefore request that the Commission defer action until such time as the Agencies notify the Commission of the completion of their review and, based on the results of such review, request appropriate action by the Commission.

“DOJ, FBI, and DHS will advise the Commission promptly upon completion of our review.”

Update 1: Though the DOJ didn’t go into detail, its review most likely centers on foreign ownership. Softbank would take a 70 percent stake in the country’s third largest mobile carrier, which would automatically trigger a review from federal agencies. It’s important to note that the Justice Department’s antitrust division, which would review from a competitive standpoint, wasn’t even named in the letter.

We reached out to the FCC for a response, but commission spokesman Justin Cole told us the FCC doesn’t comment on pending deals.

Update 2: Sprint responded to our request for comment, saying that this kind of review was expected, and Sprint doesn’t expect it to affect the overall merger timeline. “This is a routine request when working with the [Committee on Foreign Investment in the United States] agencies regarding national security,” Sprint spokesman John Taylor said in an email. “We still expect to close later this year.”

Sprint is facing opposition to its blockbuster deal, but most of it centers on competitive issues. In an FCC filing on Monday, Verizon Wireless didn’t come out against Sprint-Softbank directly, but it had plenty to say about Sprint’s related bid to acquire Clearwire. Verizon said a merged Sprint-Softbank-Clearwire would become the dominant U.S. carrier in terms of spectrum ownerships and wants the FCC to force the company to divest airwaves.

AT&T has not filed any official protests with the FCC opposing the merger, but it has made some rather cryptic statements about Sprint’s spectrum ambitions along with pulling the “foreign company” card. Dish Network has been one of the deal’s biggest opponents publicly and is fighting Sprint for control of Clearwire, but it sent a letter with the FCC to specifically note it won’t officially oppose the Softbank-Sprint deal.

This post was updated at 10:20 AM and again on 11:18 AM on Monday to add comments from the FCC and Sprint as well as background on the Sprint-Softbank deal.

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