T-Mobile, the third-largest wireless carrier in the United States, has been slapped with a hefty $60 million fine by the Committee on Foreign Investment in the U.S. (CFIUS). This penalty stems from T-Mobile’s failure to adhere to the terms of a mitigation agreement it agreed to when it acquired Sprint Corp. back in 2020.
According to Reuters, Deutsche Telekom, T-Mobile’s parent company, failed to prevent and report unauthorized access to sensitive data following the Sprint acquisition. This unauthorized access occurred in 2020 and 2021 when information was shared from a small number of law enforcement information requests.
In its defense, T-Mobile explained that technical issues arose during its post-merger integration with Sprint, which affected the sharing of this information. The company insisted that the data never left the law enforcement community, was reported in a timely manner, and was quickly addressed.
However, CFIUS wasn’t swayed by T-Mobile’s explanation. A U.S. official stated that the $60 million penalty announcement highlights CFIUS’s commitment to ramping up enforcement actions by holding companies accountable when they fail to comply with their obligations. This transparency about enforcement actions, they added, encourages other companies to comply with their own obligations.
For those unfamiliar, CFIUS evaluates foreign investments in the U.S. to assess potential risks to national security. The committee scrutinizes mergers, acquisitions, and takeovers involving foreign entities that could lead to foreign control of a U.S. business. In its assessment, CFIUS considers whether these investments could threaten national security by examining factors like technology transfer, control of critical infrastructure, and economic espionage. It operates under the auspices of the U.S. Treasury Department.
In recent times, CFIUS has significantly increased its enforcement activities. Over the past 18 months alone, the committee has levied six penalties against companies, ranging from $100,000 to $60 million. This marks a significant increase compared to the three penalties issued between 1975 and 2022.
The impact of this fine on T-Mobile remains unclear. It’s unknown whether the company plans to appeal the decision. Meanwhile, T-Mobile is currently in the process of acquiring U.S. Cellular for $4.4 billion, a transaction that could further reshape the U.S. wireless landscape.
