Chinese smartphone top selling brand Huawei Technologies has made plans to sell her undersea telecom cable business to Hengtomg Optic-Electric (value not disclosed).
The company showed the buyer’s filing to the Shanghai stock exchange (SSE) market, which did not reflect the price that the undersea cables would be bought or sold.
Hengtong Optic-Electric, which is an optical telecommunication network products company based in Jiangsu province, has said in the filing to the Shanghai Stock Exchange that it signed a letter of intent with Huawei Technologies subsidiary Huawei Tech Investment on May 31 2019 to buy its 51 percent stake in Huawei Marine Systems via cash and share issuance.
Also the Huawei Technologies has refused to provide any prompt remark about the deal when contacted. The potential sale has come as Huawei’s main business of making and selling telecom network equipment and smartphones is under intense global scrutiny as the United States works to persuade allies that Huawei’s products pose a security risk.
Huawei has also refused to cooperate with any Chinese state requesting that they access her systems for intelligent purposes.
More so, the US Commerce Department imposition of trade ban in May 2019 will further threaten to significantly disrupt its supply chain.
In March, the Wall Street Journal cited US security officials as saying they 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, Japan’s NEC and Europe’s Alcatel-Lucent, since Huawei Marine was established in 2008 as a joint venture with Britain’s Global Marine.
Subsequently Huawei Marine has participated in 90 projects worldwide and built 50,361 kilometres (31,293 miles) of cables, as this was shown on the company’s website, the projects also includes a 6,000 km cable connecting Africa and South America for the first time completed in September 2018.
According to Huawei Technologies’ annual report it shows that it booked 2018 net profit of CNY 115 million (N5billion) on revenue of CNY 394 million (N17 billion).
The annual report further showed that Huawei Technologies gained majority voting rights on Huawei Marine’s board in August 2018, 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 with a 15.66 percent stake. Hengtong Group’s founder and owner Cui Genliang is the second-largest shareholder with 14.95 percent.
Company’s Reports shows that Hengtong Optic-Electric booked 2018 net profit of CNY 2.5 billion (N110 billion) on revenue of CNY 33.9 billion (N1 trillion). It has delivered over 10,000 kilometres of undersea cables, including for projects in Papua New Guinea, Chile, Bolivia and Mexico.
Huawei has been trifling with the position of world’s second-largest smartphone vendor for a while, having taken over from Apple for the first time in 2017, before switching back and forth in 2018.
The company’s improvement in 2019, however, appears to set it up with a firmer control of the second spot:
Huawei jumped from 39.3 million phones shipped in the first quarter of 2018 to 59.1 million shipments in Q1 2019.
JONATHAN ADEROJU
