T-Mobile, the third-largest carrier in the U.S., has been hit with a $60 million fine by the Committee on Foreign Investment in the U.S. (CFIUS). This penalty is related to its failure to follow the terms of a mitigation agreement that T-Mobile agreed to when it acquired Sprint Corp. 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 Corp. acquisition. The unauthorized access occurred in 2020 and 2021 when “information (was) shared from a small number of law enforcement information requests.”
For its part, T-Mobile said it experienced technical issues during its post-merger integration with Sprint that affected sharing that information. It noted that the data never left the law enforcement community, was reported “in a timely manner,” and was “quickly addressed.”
According to one U.S. official, the “$60 million penalty announcement highlights the committee’s commitment to ramping up CFIUS enforcement by holding companies accountable when they fail to comply with their obligations.” They added that transparency about enforcement actions incentivizes other companies to comply with their obligations.
The CFIUS evaluates foreign investments in the U.S. to determine potential risks to national security. The committee reviews mergers, acquisitions, and takeovers involving foreign entities that could lead to foreign control of a U.S. business. In its assessment, the committee considers whether these investments could threaten national security, considering factors such as technology transfer, control of critical infrastructure, and economic espionage. It works out of the U.S. Treasury Department.
In just the last 18 months, the CFIUS has issued six penalties against companies, ranging from $100,000 to $60 million. This is triple the number of penalties it issued between 1975 and 2022.
It’s not known whether T-Mobile can or will appeal the decision. Currently, T-Mobile is in the process of purchasing U.S. Cellular for $4.4 billion.
