US lawmakers have been assured by wireless carriers Sprint and Softbank, that they would stop using equipment manufactured by China's Huawei.
Softbank is looking to acquire 70 per cent of Sprint for $20 billion, but would need to win the approval of regulators and agencies that had become increasingly wary of Chinese suppliers.
US Representative from Albama Mike Rogers, chairman of the House Intelligence Committee, said on Thursday that he was pleased with the commitments made by both Sprint and SoftBank.
He said he had met with SoftBank and Sprint regarding the merger and was assured they would not integrate Huawei in to the Sprint network and would undertake mitigation efforts to replace Huawei equipment in the Clearwire network.
Huawei, a leading telecommunications company, manufactures products that include routers and other internet gear. It has been trying to expand operations in the west, only to be met with resistance over security concerns and fears over alleged ties to China's government.
In October, the House Intelligence Committee under Rogers released a report that criticised the firm's record of intellectual property violations, and alleged ties to Iran. According to the committee, the company had "a pattern and practice of potentially illegal behaviour" in the US.
"The risks associated with Huawei's ... provision of equipment to US critical infrastructure could undermine core US national-security interests," the report said.
Refuting the report's findings, Huawei called them "baseless."
''I expect them to make the same assurances before any approval of the deal'' Rogers said in an e-mailed statement.
Tokyo-based Softbank and Overland Park, Kansas-based Sprint, are in the process of meeting US concerns over potential electronic spying by China.
In its report, the committee said, the US government needed to block acquisitions or mergers by Huawei and ZTE Corp, China's two largest telecom-equipment makers. It added, equipment from the companies could provide an opening for Chinese intelligence services to use US telecommunications networks for spying.
The deal had been reviewed by the US Federal Communications Commission, the Justice Department and an interagency group called the Committee on Foreign Investment in the US, or CFIUS, that checked for security implications of foreign purchases of US companies.
Bill Plummer, a US spokesman, said in an interview that Huawei did not have knowledge of the national-security review.
He said if government approval for the transaction was somehow contingent on an agreement to restrict purchase of equipment from any vendor based on the flag of heritage, then it was a sad day for free and open global trade and it did nothing to secure the network.
He added, everyone was global and every company faced the same cyber challenges.