Thu, Jul 05, 2018 - Page 10 News List

ZTE loses deal as US ban eases

HUAWEI COMPLAINT:The Chinese networking giant filed a complaint with the US FCC that its presence has been restricted ‘by unfounded allegations and suspicions’

Bloomberg

US President Donald Trump’s administration is letting ZTE Corp (中興通訊) resume some business activities while the US weighs an end to a seven-year ban on the Chinese telecom.

However, the easing of restrictions did not come soon enough for ZTE’s bid to win a contract in Italy to supply wireless equipment to Wind Tre SpA.

ZTE lost the deal because it is barred from buying US technology. Ericsson AB won the 600 million euro (US$699.7 million) contract instead, people with knowledge of the matter said.

The US imposed the ban earlier this year, saying that ZTE failed to comply with punitive measures imposed after allegations of lying about equipment sold to Iran and North Korea.

Still, the Trump administration has sought to ease restrictions on ZTE, which has become a bargaining chip amid rising trade tensions with China.

Last week, the Shenzhen-based company appointed a new chairman as part of its agreement to clean house and pay a record US$1.4 billion fine to get back into business.

The authorization by the US Department of Commerce’s Bureau of Industry and Security is valid until Aug. 1.

ZTE is expected to be in compliance with US demands by Aug. 1, a person familiar with the matter said.

Representatives for Ericsson and Wind Tre declined to comment on the Italy deal, which ZTE had originally won two years ago. Now, the Swedish telecom equipment maker has the multiyear accord to supply base stations for about 60 percent of Wind Tre’s Italian mobile networks.

The latest US authorization permits China’s No. 2 maker of telecom gear to support existing networks or equipment under contracts signed on or before April 15, when the US blocked companies from selling components to ZTE on the sanctions contraventions. The ban had forced ZTE to announce it was halting major operations.

ZTE’s new management faces the challenge of rebuilding trust with telephone carriers and corporate customers.

ZTE is said to be facing at least US$3 billion in total losses from the months-long moratorium, which cut off the flow of chips and other components it needed to make its networking gear and smartphones.

In Washington, a bipartisan group of lawmakers remains concerned about ZTE’s threat to US national security and is pushing for legislation aimed at restoring harsher penalties.

Lawmakers are set to resume negotiations on legislation that would try to balance concerns that ZTE presents a security risk with efforts to get the company back into business.

Meanwhile, Huawei Technologies Co (華為) said a proposed ban on selling its gear to some US mobile providers is not lawful, pushing back against assertions it poses a risk as the Trump administration increases pressure on China over trade and national security.

The Shenzhen-based networking giant’s presence in the US “has been artificially restricted by unfounded allegations and suspicions based solely on misperceptions” about its relationship with China’s government, Huawei said in a filing with the US Federal Communications Commission (FCC) that was made public on Tuesday.

The agency under Chairman Ajit Pai, an appointee of Trump, has proposed barring telecoms from using a federal subsidy to buy gear from companies such as Huawei and ZTE that are judged to be a national security risk.

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