Huawei Selling Its Undersea Telecoms Cable Business

Huawei is selling its undersea telecoms cable business, marking the Chinese group’s first big asset sale since the U.S. began ramping up pressure on the company amid accusations it is a national security risk, the Financial Times reported.

The sale of the majority stake in Huawei Marine Systems comes two weeks after Washington placed Huawei on an export blacklist, threatening to cripple the company by cutting it off from suppliers.

The U.S. has been lobbying its allies to block Huawei from their 5G telecoms systems, accusing the company of being a vehicle for Chinese government spying.

But while the United States has been focusing its firepower on 5G, Huawei Marine has grown to become an important player in the world’s undersea cable market, the infrastructure that forms the backbone of the global internet by carrying data between countries.

Huawei Marine has not completely avoided snags, however. In 2017 Canberra scuttled its efforts to run a cable connecting the Solomon Islands to the global internet after the initiative was red-flagged by the Australian intelligence service, FT added.

In a filing to the Shanghai Stock Exchange on Monday, Hengtong Optic-Electric, a Chinese manufacturer of communications cables, said it had agreed to buy Huawei’s 51 per cent stake in Huawei Marine Systems, which wholly owns Huawei Marine Networks. The filing did not disclose the price, but Hengtong said it would pay for the stake in cash and shares.

Huawei Marine, which was established in 2009, has undertaken 90 projects globally and laid 50,361km of cable, according to its website. In 2018 it contributed Rmb115m ($17m at today’s exchange rate) to group net profits, on revenue of Rmb394m, according to Huawei Technologies’ annual report.

Huawei’s partner in the venture, UK-based Global Marine, was last year put on the bloc. Its owner, portfolio investor HC2, hired bankers to explore “strategic alternatives, including a potential sale” of the unit.

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