A Foolish Week of Telecom

Look out for Chinese tele-communists infiltrating our networking infrastructure, according to the House Intelligence committee's report on its investigation of Chinese telecom equipment makers Huawei and ZTE.

Committee chairman Mike Rogers (R-Mich.) told CBS News' Steve Kroft on 60 Minutes, "If I were an American company today ... looking at Huawei, I would find another vendor if you care about your intellectual property, if you care about your consumers' privacy, and you care about the national security of the United States of America."

Strong words from Rogers, but totally undeserved, AFP reports Huawei spokesman William Plummer telling reporters. "Huawei unequivocally denies the allegations in the report ... The report is little more than an exercise in China-bashing and misguided protectionism."

Cisco (Nasdaq: CSCO  ) hasn't helped U.S.-China relations either, when earlier this week it ended a seven-year partnership with ZTE after heeding reporting by Reuters alleging ZTE was selling Cisco telecom equipment to Iran, a violation of U.S. law.

Power of threes
The third-largest mobile operator in Japan is trying to raise enough money to buy the third-largest mobile carrier in the U.S. According to Reuters, Masayoshi Son, the third-richest man in Japan and the CEO of Softbank, wants to make an offer Sprint Nextel (NYSE: S  ) can't refuse.

That offer, according to Japanese newspaper Nikkei, would be $19 billion for over two-thirds of the U.S. carrier. If, as Reuters reports, Softbank would try for two birds with one stone by making an additional bid for MetroPCS (NYSE: PCS  )  -- the Japanese carrier would have to fork up around $25.5 billion.

Softbank's ambitions have had it growing by leaps and bounds through acquisitions. It took over Vodafone's (Nasdaq: VOD  ) Japanese operations in 2006 for $15.5 billion, and announced a plan to buy smaller wireless rival eAccess for $2.3 billion earlier this month. Softbank was also the first Japanese carrier to offer the iPhone.

If the eAccess acquisition goes through, Softbank would become the No. 2 Japanese carrier, behind NTT DoCoMo (NYSE: DCM  ) . If able to buy both Sprint and MetroPCS, Softbank would become a major global wireless carrier.

What about Clearwire?
It's impossible to talk about Sprint without also talking about Clearwire (Nasdaq: CLWR  ) . Daniel Martino, the manager of a T. Rowe Price fund that holds 47.2 million Sprint shares, told Reuters it is important that any deal with Softbank should also include buying up Clearwire for its wireless spectrum. "I just don't think there's any deal unless it involves Clearwire," he said.

On first reports of a possible Softbank/Sprint deal, Clearwire's share price took off, finally closing with a 71% gain on Thursday. Sprint already owns 49% of Clearwire.

Not so fast, Apple, says appeals court
That $1 billion judgment against Samsung in the patent infringement lawsuit Apple (Nasdaq: AAPL  ) brought against the Korean company has been overturned, at least partially. The U.S. Federal Circuit Court of Appeals said the ruling by U.S. District Judge Lucy Koh to issue a preliminary injunction against Samsung's Nexus smartphone had no legal basis.

And that $1 billion? Samsung has moved to set that aside, but as yet, it still looms.

T-Mobile USA and iPhone, no more
At least they won't be together in T-Mobile's advertisements any more. You may have noticed the image of an iPhone in T-Mobile's month-old marketing campaign to get AT&T's (NYSE: T  ) iPhone users to switch networks. The come-on was that AT&T iPhones can also be used on T-Mobile's network, and any switchers would save $50 on their bills.

I guess that's one way to get the iPhone on T-Mobile's network without having to take a bath from the huge subsidies carriers have to pay for that privilege. T-Mobile is the only major U.S. carrier that does not offer the iPhone.

Why was the iPhone removed from the ads? For no other reason than a "natural progression" in the marketing campaign, according to a T-Mobile spokeswoman, Dow Jones Newswires reports. Given Apple's penchant for bring suit against any perceived intellectual property infringement, I wouldn't be surprised if there were more to the story.

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Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool owns shares of Apple. Motley Fool newsletter services recommend Apple and Vodafone. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 12, 2012, at 9:18 PM, kthor wrote:

    China's Law are totally different from the US or western EU, do you expect them to play fairly?

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