Brendan Carr, Chair of the U.S. Federal Communications Commission (FCC), has signaled a potential roadblock for telecom mergers and acquisitions (M&A) tied to companies promoting diversity, equity, and inclusion (DEI) policies. Additionally, Carr announced a sweeping investigation into Chinese government-linked businesses operating in the U.S. despite national security restrictions.

FCC Chair Warns of DEI Scrutiny in Telecom Mergers

Carr, who assumed leadership of the FCC in January, told Bloomberg that companies with “invidious” DEI policies may find their merger approvals at risk. Under FCC regulations, M&A transactions can only proceed if they serve the “public interest”, and Carr suggested that DEI programs could be grounds for rejection.

“Any businesses that are looking for FCC approval, I would encourage them to get busy ending any sort of their invidious forms of DEI discrimination,” Carr stated.

The potential fallout from this stance could affect several high-profile deals, including:

Verizon’s $20 billion acquisition of Frontier
T-Mobile’s purchase of UScellular’s wireless operations and spectrum
Paramount Global’s pending merger with Skydance Media

Carr has previously criticized Verizon and Comcast for their DEI policies, suggesting they could impact regulatory decisions. He also clashed with outgoing FCC Commissioner Geoffrey Starks, who opposed restrictions based on diversity programs.

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FCC Expands Probe into Chinese Companies Operating in the U.S.

In a separate initiative, Carr announced a broad investigation into companies linked to the Chinese Communist Party (CCP), citing national security risks. The FCC’s Covered List—which bans specific firms due to security concerns—includes:

Huawei
ZTE Corporation
Hytera Communications
Hikvision Digital Technology
Dahua Technology
China Mobile International USA
China Telecom (Americas) Corp.
Pacifica Networks Corp./ComNet (USA) LLC
China Unicom (Americas) Operations Ltd.

Carr expressed concerns that some of these entities may still be operating in the U.S. despite restrictions. The FCC has issued letters of inquiry and subpoenas to confirm compliance.

“We have reason to believe that, despite those actions, some or all of these Covered List entities are trying to make an end run around those FCC prohibitions by continuing to do business in America,” Carr said. “We are not going to just look the other way.”

Both former President Donald Trump and President Joe Biden’s administrations have taken aggressive action against Chinese telecom firms, citing espionage risks and national security concerns. The FCC’s latest probe suggests that further regulatory crackdowns could be on the horizon.

What’s Next?

Carr’s stance on DEI policies and national security risks indicates a shift in telecom regulation that could affect major corporate deals. Companies facing FCC scrutiny may need to modify their DEI programs or prove their transactions align with U.S. public interest laws. Meanwhile, the investigation into CCP-linked companies could lead to more restrictions on foreign telecom firms operating in the U.S.

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