SoftBank’s bid for Sprint has been cleared by the Committee on Foreign Investment in the United States (CFIUS), an important step for the Japanese company in countering national security concerns raised by its proposed takeover.

As part of the green light for the deal, the two companies have entered into a so-called National Security Agreement with the US government which is effective from the date of CFIUS’ clearance. The agreement will end if the merger between the two companies is terminated.

Following CFIUS’ green light, it is expected that the Department of Justice and Department of Homeland Security will notify the Federal Communications Commission (FCC) that the deal is clear of any national security concerns. This will leave the FCC free to complete its public interest review of the takeover.

The announcement follows a report in the Wall Street Journal that SoftBank and Sprint had reached preliminary agreement with the US government to address national security concerns over the Japanese company’s takeover.

The report set out how the agreement will give the government extensive say over how a SoftBank-owned Sprint selects telecoms equipment.

SoftBank is facing a fight with rival Dish for control of Sprint, in which national security has played an increasing role.

Dish has played the patriotic card in its battle with the Japanese company but the CFIUS decision could neutralise its attacks.

Under the terms of the SoftBank-Sprint agreement with the government, the US authorities would acquire the right of veto over Sprint’s equipment purchases, according to people familiar with the situation.

And the new Sprint would introduce a four-member security committee. One of the four members would be a security director, also sitting on Sprint’s board, a detail which first emerged last week.

And the government would get to approve the members of the committee.

SoftBank has already said it will remove equipment supplied by Huawei from the network of Clearwire. Sprint owns 50 per cent of Clearwire and is trying to buy the remainder. The clearout would cost $1 billion, it was reported last week.

SoftBank and Sprint have also agreed to create a subsidiary designed to handle any sensitive work it does for the US government, said sources.

The security establishment in the US has a long term unease over Huawei and its links to the Chinese government.