Huawei to sell 51pc stake in undersea cable business after US trade blacklist
- Huawei Marine Networks is a joint venture with Britain’s Global Marine Systems
Huawei Technologies is selling its majority slice of its global submarine cable division, exiting the business of laying undersea piping for the internet just weeks after the Trump administration blocked the Chinese firm from buying American technology.
The corporate parent of Huawei is selling its 51 per cent of Huawei Marine Networks to Hengtong Optic-Electric Co, a Jiangsu-based optical-cable manufacturer, according to a stock exchange filing. The deal is not formalised and subject to change, Hengtong said in the filing.
Hengtong, whose Shanghai-listed shares have been suspended from trade, did not disclose the size of the deal.
A Huawei spokesman declined to comment. Huawei Marine and Hengtong did not immediately reply to calls and emails from Bloomberg News.
Huawei among more than 140 Chinese entities on US trade blacklist
President Donald Trump’s administration has targeted Huawei for months, first encouraging allies to ban the Chinese company’s equipment from their networks and then putting Huawei on an export blacklist that prohibits it from buying American software and components.
Huawei founder and chief executive Ren Zhengfei talked about the possibility of a strategic retreat – for instance by shrinking in scale – after the US Commerce Department blacklisted Huawei and 67 of its affiliates across the world in May.
Huawei Marine, a joint venture between Huawei and British undersea cable firm Global Marine Systems, has drawn scrutiny because of its role in building fundamental internet-connection infrastructure.
The US and Australia, in particular, are said to be concerned about information security, arguing Beijing can take advantage of projects built by Huawei to conduct espionage. Huawei, the world’s largest telecommunications equipment supplier, has repeatedly denied such allegations.
Huawei ban: why Asian countries are shunning Trump’s blacklist despite concerns about China’s influence
Huawei Marine plays a key role in Ren’s ambitions. It is involved in building about 90 undersea cable projects from the Pacific to the Atlantic, laying over 50,000 kilometres of undersea cable, according to an introduction on the company’s website. It also built multiple cable routes from England to the vicinity of Cape Town, South Africa. Other high-profile projects include a cross-Atlantic route that would link Brazil and Cameroon.
Yet the submarine unit is a relatively small business for Huawei, which generates annual sales bigger than Alibaba Group Holding and Tencent Holdings combined. New York-traded Alibaba is the parent company of the South China Morning Post.
Huawei Marine contributed a net profit of 115 million yuan (US$17 million) for its holding company in 2018, according to privately held Huawei’s annual report.
