Huawei gets out of the subsea game

A filing with the Shanghai Stock Exchange has revealed Huawei will be selling its marine cabling business, the first divestment since relationships turned sour with the White House.

Hengtong Optic-Electric is the kind recipient of the marine business, according to Reuters, claiming a 51% stake. Although the business is profitable, $16.66 million in 2018 according to Huawei’s annual report, removing a distraction of a capital-intensive unit might be what the wider business needs in this tenuous period of international dispute.

Huawei’s marine business has been up-and-running since announcing a joint venture with Global Marine in 2008. Over the last decade, Huawei has slowly been eating up more market share, with the firm participating in 90 projects worldwide, building more than 50k kilometres of the undersea cables. It was one of the participants which built the first cable connecting Africa and South America, completed in September.

While it is a firm under pressure on the international political scene, it does have a tendency to be very competitive in all the segments which it casts an eye to. The same could be said regarding the subsea world, and there may be a few parties happy to see the bad of it.

Aside from Huawei, NEC and Alcatel-Lucent are big players in the market, though there are certainly some US names in the mix. SubCom is a big name, while Infinera and Ciena are also players.

Despite many suggesting US Government actions against Huawei, and Chinese companies more generically, have been to reassert the US’ position in the technology industry. That said, while this is one of the scenarios which seem to benefit US firms, there has been plenty of collateral damage, not least to mention the number of US companies in the Huawei supply chain who are watching their business crumble away day-by-day.

It’ll vary from person to person if you believe the link between the trade war and this sale, but you can’t argue about the material impact President Trump is having on the telecoms industry.