Huawei to sell subsea cable business

Huawei is reportedly planning to sell its subsea cable business according to a buyer’s filing.

Made on 31 May 2019 to the Shanghai Stock Exchange, the filing showed that Hengtong Optic-Electric Co, an optical telecoms network vendor, had signed a letter of intent with Huawei Technologies to buy its 51% stake in Huawei Marine Systems.

Through no price was given, the deal is set to be financed through a combination of cash and shares.

The news comes weeks after President Trump issued an executive order on “information and communications technology and services supply chain” which gives him and the rest of the US government unprecedented power to ban any business dealing. The order bans Huawei from buying technology from any US company without a license from the US government.

A few days after the order was issued, the US government then relaxed its embargo on Huawei until 18 August. The Department of Commerce (DoC) issued a temporary general license which sets out limited exclusions to the order giving operators time to get their plans in order.

“The temporary general license grants operators time to make other arrangements and the Department space to determine the appropriate long term measures for Americans and foreign telecommunications providers that currently rely on Huawei equipment for critical services,” said Secretary of Commerce Wilbur Ross. “In short, this license will allow operations to continue for existing Huawei mobile phone users and rural broadband networks.”

It has been rumored that the sale of Huawei Marine is happening because the company is now facing stronger scrutiny, which may affect its ability to win new business.

Speaking to the FT, Fergus Hanson, head of the International Cyber Policy Centre at the Australian Strategic Policy Institute, said, “It’s becoming a more difficult environment when trying to negotiate deals to build cables because [Huawei] is so much in the spotlight.”