Huawei Will Exit Undersea Cable Business Amid Trump Ban

Huawei is selling its majority slice of its global submarine cable division, exiting the business of laying undersea piping for the internet, according to Bloomberg.

Huawei’s corporate parent is selling its 51% of Huawei Marine Networks to Hengtong Optic-Electric, a Jiangsu-based optical-cable manufacturer, according to a stock exchange filing. The deal isn’t formalized and subject to change, Hengtong said in the filing. The Chinese company, whose Shanghai-listed shares have been suspended from trade, didn’t disclose the size of the deal.

Huawei Marine, a joint venture between Huawei and British undersea cable firm Global Marine Systems, has drawn scrutiny because of its role in building fundamental internet-connection infrastructure. The U.S. and Australia in particular are said to be concerned about information security, arguing Beijing can take advantage of projects built by Huawei to conduct espionage. Huawei has repeatedly denied such allegations.

Huawei Marine plays a key role in Ren’s ambitions. It’s involved in building about 90 undersea cable projects from the Pacific to the Atlantic, laying over 50,000 kilometers of undersea cables, according to an introduction on the company’s website. It also built multiple cable routes from England to the vicinity of Cape Town, South Africa. Other high-profile projects include a cross-Atlantic route that would link Brazil and Cameroon. Yet the submarine unit is a relatively small business for Huawei. It contributed a net profit of 115 million yuan ($17 million) for its holding company in 2018, according to Huawei’s annual report.