Huawei Technologies plans to sell its undersea telecom cable business, showed a buyer’s filing on Monday, Reuters reported.
Hengtong Optic-Electric, an optical telecommunication network products company based in Jiangsu province, 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 to buy its 51 percent stake in Huawei Marine Systems via cash and share issuance.
The filing did not disclose a price.
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 United States works to persuade 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. The U.S. Commerce Department imposed a trade ban last month that threatens to significantly disrupt its supply chain.
A report in The Wall Street Journal in March said 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 U.S. 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.
Huawei Marine 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.
Huawei Marine booked 2018 net profit of 115 million yuan ($16.66 million) on revenue of 394 million yuan, according to Huawei Technologies’ annual report.
The annual report showed Huawei Technologies gained majority voting rights on Huawei Marine’s board in August 2018, with Global Marine retaining a 49 percent non-controlling interest.
Hengtong Group on its website said it is China’s biggest solutions provider in fiber-optic networks and smart electricity grids, with over 70 subsidiaries at home and abroad, including Indonesia-listed cable maker PT Voksel Electric Tbk.
Hengtong Optic-Electric booked 2018 net profit of 2.5 billion yuan on revenue of 33.9 billion yuan, according to its annual report. It has delivered over 10,000 kilometers of undersea cables, including for projects in Papua New Guinea, Chile, Bolivia and Mexico, the annual report showed.