Huawei to Sell Subsea Cable Biz

June 3rd, 2019 by · Leave a Comment

Soon Huawei will be out of the undersea cable business. In a filing to the Shanghai Stock Exchange on Friday, an agreement was revealed that will see the Chinese vendor sell its stake in Huawei Marine to Hengtong Optic-Electric Co. 

Huawei owns 51% of Huawei Marine, the other half being owned by Global Marine Systems. The divison generated CNY394M, or $57M in 2019, which of course is a tiny piece of Huawei as a whole. But pretty much all of that business has exposure to Huawei's overall political troubles these days. The Chinese vendor has been under pressure from the US and the Trump administration, culminating recently in an executive order blacklisting the company from the industry in the US.

So how will this change if the company is 51%-owned by Hengtong? Well the ownership is still Chinese, but not specifically called out by the Trump administration. That means they may be able to access US-based software and components. The question is whether the cloud will follow them, or will the current political weather stay with the parent company.  Huawei Marine's roots are as the subsea cable division of Cable & Wireless, with a 5-year stint as part of Global Crossing and 10 years under Bridgehouse Marine before Huawei took control.

The deal likely hopes to preserve existing projects, given how quickly Huawei's US partners on other fronts have been bailing.  It's harder to replace a subsea contractor mid-stride, or at least it takes quite a bit longer.

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Categories: Mergers and Acquisitions · Undersea cables

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