Even with that approval, there are still a number of regulatory, congressional and investor hurdles facing SoftBank before it can close on its plan to break into the U.S. market. One influential U.S. senator said on Wednesday he was "carefully examining" the approval to see if it eased his security concerns.
The companies said they had received notice from the Committee on Foreign Investment in the United States (CFIUS) that it had completed its national security review of the proposed deal and there were no unresolved issues.
The approval was a blow to Dish Network, which launched an unsolicited $25 billion offer for Sprint in April.
Dish has mounted an aggressive lobbying campaign, trying to convince Washington decision-makers that foreign ownership of Sprint posed threats to U.S. national security.
In a statement late on Wednesday, Dish said the CFIUS agreement failed to address the relevant national security concerns, and the company called on Congress to conduct a review of the whole process.
On paper, all that stands in SoftBank's way now is approval from the government's "Team Telecom" security panel, the Federal Communications Commission and Sprint shareholders.
Dish, however, has been drumming up worries about the deal among lawmakers, regulators and investors, and now hopes those concerns could delay the FCC vote long enough for the shareholders to vote on June 12 on SoftBank's bid.
The FCC's transactions team is still reviewing SoftBank's bid for its market impact and no draft approval has yet circulated among the three commissioners' offices, two FCC sources said on Wednesday. A non-binding 180-day deadline for completing the review expires on Wednesday but the agency routinely extends flexible timelines.
The FCC traditionally can be reluctant to act in a way that would influence shareholders, and it remained unclear whether acting Chairwoman Mignon Clyburn's office would choose to follow CFIUS and act before a shareholder vote.
The chair's office declined comment.
NATIONAL SECURITY CONCERNS
To alleviate some national security concerns, SoftBank and Sprint agreed to several conditions, including giving the Department of Defense, Department of Homeland Security and the Department of Justice the power to review and veto new equipment purchases in certain circumstances.
Sprint disclosed some of the conditions in its filing with the U.S. Securities and Exchange Commission on Wednesday. The companies would also appoint a new Sprint board member, to be approved by the U.S. government, to oversee national security compliance.
As part of the deal with CFIUS, sources previously told Reuters that SoftBank had also agreed to remove equipment made by China's Huawei Technologies Co Ltd from Sprint and Clearwire Corp's networks if the deal was completed by the end of 2016.
Last week, Clearwire's board recommended Sprint's sweetened buyout offer for the company after Sprint raised its bid.
The question remains whether CFIUS approval with such conditions will ease the concerns of Senators Charles Schumer and John McCain, both of whom have sent letters to the FCC calling for careful scrutiny of SoftBank's offer on national security grounds.
"CFIUS has agreed that there are security concerns here, and we're carefully examining the conditions they've imposed to address them," Schumer said in a statement issued by his office.
One analyst said that in the end, even with those concerns, SoftBank was likely to win the approvals it needs.
"McCain and Schumer are not your average senators, so their concerns will definitely get maximum attention at the agencies. But Japan is considered a friendly country, an ally and unless there's more to come on the national security issue, I suspect regulators will end up greenlighting the deal," said Paul Gallant, a telecom policy analyst at Guggenheim Partners.
Japanese mobile operator SoftBank agreed to buy a 70 percent stake in Sprint last October.
Sprint shares rose 0.1 percent to $7.28 on Wednesday, while Dish fell 2.2 percent to $39.25.