Huawei Technology to sell undersea cable business

The disclosure was made by Hengtong Optic-Electric Co Ltd in a filing to the Shanghai Stock Exchange.

On Monday, a filing by China’s Hengtong Optic-Electric Co Ltd, an optical communication network products company based in Jiangsu, showed that Huawei Technologies Co Ltd plans on selling its 51% stake in Huawei Marine Systems Co Ltd – its undersea telecommunications cable business.

The letter of intent was filed to the Shanghai Stock Exchange on Monday. It showed Huawei Tech Investment Co Ltd, a subsidiary of Huawei Technologies to buy the stake in cash and shares on May 31. It did not mention a price for the transaction.

Huawei Technologies declined comment.

Trading of Hengtong Optic-Electric shares was suspended on Monday pending discussions on the deal.

The potential sale comes in the wake of Huawei Technologies’ main business of selling telecom network equipment and smartphones coming under intense global scrutiny with the United States alleging that its products poses a risk to national security.

Huawei has denied the allegations.

Huawei Marine, established in 2008 as a joint venture with Britain’s Global Marine, is mainly engaged in the construction of global undersea communications cables.

Going by Huawei Technology’s annual report, it gained gained majority stake in Huawei Marine in in August 2018 with Global Marine retaining a 49% non-controlling interest.

Its annual report shows, Huawei Marine contributed $57.10 million (394 million yuan) in revenues and posted a net profit of 115 million yuan in 2018.

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