Huawei, from China, will sell its submarine cable business

HONG KONG (Reuters) – China's Huawei Technologies Co Ltd plans to sell its 51 percent stake in the Huawei Marine Systems Co Ltd subsea cable business, according to an exchange of information filed Monday by the buyer Chinese.

Hengtong Optic-Electric Co Ltd, an optical communication network products company based in Jiangsu Province, said in a statement to the Shanghai Stock Exchange that it has signed a letter of intent with Huawei Tech, a subsidiary of Huawei Technologies. May 31 in cash and shares. He did not mention a price.

Huawei Technologies declined to provide immediate feedback when contacted by Reuters. Trading in Hengtong Optic-Electric shares was suspended on Monday pending talks on the deal.

The potential sale comes as Huawei Technologies' main business of selling telecommunication network equipment and smartphones is being scrutinized on a global scale, with the United States claiming that its products pose a risk. for the safety. Huawei denied the allegations.

Last month, the US Department of Commerce imposed a trade ban on Huawei, which threatened to severely disrupt its supply chain, even though it has since enjoyed a temporary stay.

In March, the Wall Street Journal quoted US security officials as saying that Huawei's submarine cables could be exposed to espionage by the Chinese state, which the company denied.

Huawei Marine, created in 2008 as a joint venture with UK-based Global Marine, is primarily focused on the construction of global submarine communication cables.

According to Huawei Technology's annual report, the technology giant obtained majority voting rights from Huawei Marine's board of directors in August 2018, with Global Marine retaining a 49% non-controlling interest.

Huawei Marine generated revenues of 394 million yuan (57.10 million US dollars) and posted a net profit of 115 million yuan in 2018, according to Huawei Technologies' annual report.