First, it reportedly cut down on new-handset orders from its manufacturing partner Foxconn in the wake of the U.S restriction while its goal of becoming the number phone maker has also been endangered, and now, reports from China suggest the Chinese giant is disposing one of its numerous business lines by agreeing to sell off its undersea cable operations – Huawei marine systems.
Huawei Technologies plans to sell its entire 51% majority-stake in submarine cable business joint venture Huawei Marine Systems to Chinese optical telecommunication network products company Hengtong Optic-Electric Co. In a filing to the Shanghai Stock, Hengtong Optic-Electric Co confirmed it had earlier on May 31 signed a letter of intent with Huawei Tech Investment Co to take over its 51 percent stake in Huawei Marine Systems via cash and share issuance.
Details of the deal are yet to be disclosed, but there are indications it could run into hundreds of millions of dollars, given that the company reported a net profit of 115 million yuan ($16.66 million) on revenue of 394 million yuan ($57m). Trading of Hengtong Optic-Electric shares has since been put on hold pending when a deal is reached.
Undersea cables are an important aspect of global internet traffic, and Huawei Marine since it was established in 2009 has participated in 90 projects worldwide and built 50,361 kilometers (31,293 miles) of cables, its website showed, including a 6,000 km cable connecting Africa and South America for the first time completed in September last year. The decision to dispose of the business line may have stern out from the suspicions and worries that its equipment poses security threats.