Tue, Jun 04, 2019 - Page 10 News List

Huawei to sell undersea cable business: document

SECURITY CONCERN:Huawei has been gaining share in the industry, building 50,361km of cables so far and booking a net profit of US$16.66 million for last year

Reuters, HONG KONG

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

Hengtong Optic-Electric Co (亨通光電), an optical telecommunication network products company based in Jiangsu Province, said in the filing to the Shanghai Stock Exchange that it on Friday signed a letter of intent with Huawei Technologies subsidiary Huawei Tech Investment Co (華為技術投資) to buy its 51 percent stake in Huawei Marine Systems Co (華為海洋網絡) via cash and share issuance.

The filing did not disclose a price.

Huawei Technologies declined to provide comment when contacted by reporters.

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 US works to persuade its 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 Department of Commerce last month imposed a trade ban that threatens to significantly disrupt its supply chain.

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

Undersea cables are the backbone of global Internet traffic. Huawei has been gaining share in the market dominated by US firm SubCom LLC, Japan’s NEC Corp and Europe’s Alcatel-Lucent SA, since Huawei Marine was established in 2008 as a joint venture with the UK’s Global Marine Group.

Huawei Marine has participated in 90 projects worldwide and built 50,361km of cables, its Web site showed, including a 6,000km cable connecting Africa and South America for the first time, completed in September last year.

It booked net profit of 115 million yuan (US$16.66 million) for last year on revenue of 394 million yuan, according to Huawei Technologies’ annual report.

The annual report also showed that Huawei Technologies gained majority voting rights on Huawei Marine’s board in August last year, with Global Marine retaining a 49 percent non-controlling interest.

According to exchange filings, Hengtong Optic-Electric’s largest shareholder is privately owned Hengtong Group (亨通集團) with a 15.66 percent stake.

Hengtong Group’s founder and owner Cui Genliang (崔根良) is the second-largest shareholder with 14.95 percent.

Hengtong Group on its Web site said it is China’s biggest solutions provider in fiber-optic networks and smart electricity grids, with more than 70 subsidiaries at home and abroad, including Indonesia-listed cable maker PT Voksel Electric Tbk.

Hengtong Optic-Electric booked net profit of 2.5 billion yuan for last year on revenue of 33.9 billion yuan, according to its annual report.

It has delivered more than 10,000km of undersea cables, including for projects in Papua New Guinea, Chile, Bolivia and Mexico, the annual report showed.

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