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Huawei fails to win US Telecom Assets once again despite higher bids

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Huawei faces blacklisting from India on Security Concerns

Huawei has been blacklisted by the Indian government from supplying telecom equipment due to security concerns.Despite strong lobbying by the Chinese government and Indian telecom operators,Chinese telecom equipment firms have been effectively frozen out of the world’s fastest growing telecom market.Huawei has also faced push-back from the US government which has blocked Huawei from acquiring US telecom companies.Huawei failed to win over 3Com when the company was sold as it failed to get regulatory approvals from US authorities

Huawei’s PLA links leads to failure in acquiring US Technology Assets

Huawie’s origins which are closely linked with the Chinese Army (PLA) makes it a natural suspect.Telecom equipment is a now crucial security component of a country’s infrastructure.No one wants a foreign firm with links to that country’s army to be involved in building such critical communication components.Huawei has been criticized over stealing Intellectual Property (IP) and Piracy with Motorola recently filing a case against the company.Huawei has become one of the leading telecom equipment suppliers in the world from being a non-entity a decade ago.Telecom Equipment Industry has high entry barriers because of the technology and capex required.This makes both Huawei and ZTE suspetible to claims of stealing technology from foreign firms like Nokia-Siemens,Motorola and Alcatel.Its not a big surprise then that US government is blocking Huawei from acquiring critical technology assets in the USA.It has been reported that Huawei has failed in acquiring 2Wire and Motorola’s wireless equipment unit despite bidding $100 million higher than competing offers.The Huawei bid failed because of the uncertainty over US government approvals.Morgan Stanley has been hired by Huawei to acquire US technology assets but success has proved to be elusive.

Huawei Said to Have Failed in U.S. Takeover Bids – Businessweek

Huawei Technologies Co. failed to reach agreements to buy two U.S. assets last month, even though the Chinese phone-equipment maker offered at least $100 million more in each case, according to two people with knowledge of the matter.

The sellers doubted Huawei’s ability to win U.S. government approval to purchase software supplier 2Wire Inc. and Motorola Inc.’s wireless-equipment unit, the people said. They declined to be identified because Huawei’s offers weren’t public.

Huawei, founded by former Chinese army official Ren Zhengfei, failed in its latest attempts to expand in the U.S. where the Shenzhen, southern China-based company had encountered opposition based on national security concerns. In 2008, Huawei dropped a bid for computer-equipment maker 3Com Corp. after the U.S. began investigating whether a deal would give China access to anti-hacking technology used by the Defense Department.“There is still some skepticism in the U.S. about any potential sale of technology assets to a Chinese company,” Wilson Chai, an analyst at Mirae Asset Securities in Hong Kong, said by phone today. “After years of trying in the U.S., Huawei hasn’t made any significant breakthroughs in that market.”

Huawei hired Morgan Stanley in its attempts to purchase a U.S. asset, the people said. The Chinese company was also assisted by law firms such as Sullivan & Cromwell LLP and Skadden, Arps, Slate, Meagher & Flom LLP, according to the people.


Sneha Shah

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