Huawei offers free mobile network for London after reversal on US acquisition

Chinese telecomms equipment maker Huawei has changed its mind about the controversial acquisition of US server manufacturer 3Leaf, after national security concerns had been raised in the US.

Huawei purchased intellectual property from 3Leaf in May 2010 for $2 million but the deal caused concern in the US government, as it had not been cleared through the Committee on Foreign Investment in the United States (CFIUS).

Huawei initially rejected the CFIUS's recommendation to voluntarily divest from acquisition, but has now had a change of heart.

"This was a difficult decision, however we have decided to accept the recommendation of CFIUS to withdraw our application to acquire specific assets of 3Leaf," Huawei said in a statement Saturday.

"Huawei will remain committed to long-term investment in the United States. The significant impact and attention that this transaction has caused were not what we intended. Rather, our intention was to go through all the procedures to reveal the truth about Huawei," it said.

Huawei has been accused by US officials of being linked to the Chinese military, which has made it difficult for the company to complete other US business deals in the past. Huawei denies such ties, however, stressing that the company is completely employee-owned.

It is not clear at this stage how the deal is to be undone, however.


In a separate announcement, Huawei has confirmed it has entered the bidding process to provide a mobile phone network for use on the London Underground in time for the 2012 Olympic Games.

The network would be installed at the Chinese company’s own expense, and is being pitched as a gift from the last Olympic host nation to the next, with work guaranteed to be completed by next summer if the proposal proves successful.

The use of mobile phones on the Underground is also a cause for security concerns, but Huawei said yesterday that “Our newly opened cyber security centre in the UK shows our commitment to ensuring our equipment meets the most stringent security requirements.”