Huawei seeks US green light for Motorola deal

Robert Clark
06 Apr 2010

Chinese vendor Huawei has begun lobbying US security officials in an attempt to pave the way for a tilt at Motorola’s network equipment unit, has reported.

Huawei is aiming to forge a “mitigation agreement” with the Obama Administration - similar to one secured by Alcatel when it acquired Lucent Technologies – which would ensure that a bid for the Motorola business was not blocked on security grounds.

Such an agreement might quarantine certain sensitive operations, or stipulate that such operations be placed under the oversight of US citizens.

Huawei told the FT it was “open to exploring options to address concerns” of the US government.

Now the world’s second largest equipment vendor by sales, its growth in the US has been stymied by security fears over its alleged links to the People’s Liberation Army (PLA).

CEO Ren Zhengfei and other former PLO officers founded the company in Shenzhen in 1987. The privately-held vendor has repeatedly denied it has any formal ties to the PLA, but has never disclosed details on its major shareholders.

Huawei abandoned a 2008 bid with Bain Capital to acquire 3Com in 2008 after the US government made it clear the deal would be blocked on national security grounds.

The FT said some US officials “who are wary of the company have been frustrated by Huawei’s ability to secure contracts with US telecommunications groups, such as Clearwire and Cox Communications.”

Huawei has been touted as the most likely buyer for Motorola’s shrinking infrastructure division, which is increasingly unable to compete in the market dominated by Ericsson, Huawei, Alcatel-Lucent and Nokia Siemens.

selling it off

The US is not the only country to hold security concerns about Huawei. The Indian government has excluded it from supplying telecom equipment for sensitive border states.

Huawei was subject to a probe by the Australian domestic security agency ASIO last year ahead of the country’s NBN tender.

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