Huawei to sell undersea cable business

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People are seen at the booth of Chinese tech company Huawei at the 2019 Mobile World Congress in Barcelona, Spain. (Xinhua/Guo Qiuda)

HONG KONG (Reuters) – Huawei Technologies Co Ltd plans to sell its undersea telecom cable business, showed a buyer’s filing yesterday, in its first major asset sale since the United States ratcheted up accusations of the Chinese firm being a vehicle for espionage.

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Hengtong Optic-Electric Co Ltd, an optical telecommunication network products company based in Jiangsu province, said in the filing to the Shanghai Stock Exchange that it signed a letter of intent with Huawei Technologies subsidiary Huawei Tech Investment Co Ltd on May 31 to buy its 51 percent stake in Huawei Marine Systems Co Ltd via cash and share issuance.

The filing did not disclose a price.

Huawei Technologies declined to provide immediate comment when contacted by Reuters. The potential sale comes as Huawei’s main business of making and selling telecom network equipment and smartphones is under intense global scrutiny as the United States works to persuade allies that Huawei’s products pose a security risk.

Huawei has said it would not cooperate with any Chinese state request to access its systems for intelligence purposes. Even so, the US Commerce Department imposed a trade ban last month that threatens to significantly disrupt its supply chain.

In March, The Wall Street Journal cited US security officials as saying the suspected security risk extended to undersea cables built by Huawei Marine.

Undersea cables are the backbone of global internet traffic.

Huawei Marine has participated in 90 projects worldwide and built 50,361 kilometres of cables.

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