India Said to Block Orders for ZTE, Huawei Technologies Telecom Equipment
India’s government blocked China’s Huawei Technologies Co. and ZTE Corp. from selling network equipment to domestic phone carriers because of security concerns, according to two people with knowledge of the matter.
Sistema Shyam Teleservices Ltd., the Indian unit of Russia’s AFK Sistema, didn’t get clearance to buy Chinese telecom gear, according to the people, who declined to be identified because the information is confidential. The government denied similar requests from at least three other local phone carriers, according to one of the people.
India, which trails only China in terms of mobile-phone users, is stepping up scrutiny of imported switches and routers as phone operators plan to roll out high-speed services later this year. The government last year imposed anti-dumping duties against gear from vendors including Huawei, China’s biggest maker, saying the products were sold at below market prices.
“Huawei and ZTE typically charge lower prices, making their products more competitive,” said Wilson Chai, who rates ZTE shares “buy” at Mirae Asset Securities in Hong Kong. “The costs for Indian carriers will go up if they aren’t allowed to buy from Chinese vendors.”
Bharti Airtel Ltd., India’s largest phone carrier, doesn’t comment on matters related to national security, Ashutosh Sharma, a spokesman at the company, said in an e-mail. Chen Rongkai, a media officer for China’s Ministry of Commerce in Beijing, declined to comment.
Security Clearance
Huawei hasn’t been notified about a ban though the company is seeking clarification on the matter, the network-equipment maker said in an e-mailed statement today. Ross Gan, a Huawei spokesman, said in December the closely held Chinese company had $1.7 billion in contract sales from India in 2008.
Margrete Ma, a spokeswoman for ZTE, said the company is looking into the situation and declined further comment.
Indian carriers need to get security clearance from the Ministry of Home Affairs before they import equipment, according to a spokesman at the Department of Telecommunications, who declined to be identified.
“There’s no blanket ban on Chinese equipment,” Gopal K. Pillai, the top bureaucrat in the Home Ministry, told reporters in New Delhi today. “We review equipment case by case.”
Sistema also failed to obtain approval from the Department of Telecommunications to buy gear from Lenovo China Pvt., Mobi Antenna Technologies, Zhongxing Xindi Telecom Equipment Ltd., and Leoch Battery Co., the people said. A Sistema spokesman declined to comment.
Orders Turned Down
ZTE, China’s second-biggest phone-equipment maker, fell 4.2 percent to HK$28.30 in Hong Kong, after dropping as much as 9.9 percent earlier. The Shenzhen, south China-based company counts India as its biggest overseas market, Vice-President Zhang Jianguo said in September.
India’s Department of Telecommunications informed Prime Minister Manmohan Singh’s office that requests from Indian companies to import Chinese network equipment are being turned down because of security concerns, the Financial Times reported today, citing correspondence between government agencies. Harish Khare, a media adviser for Singh, said he’s not aware of any such correspondence.
Hackers traced back to China infiltrated computers including those of India’s government, underscoring the growing threat of cyber attacks, according to a report this month by Information Warfare Monitor, a research group associated with the University of Toronto. The Indian government said at the time it was investigating the matter, while China’s foreign ministry said it doesn’t condone Internet attacks.
China and India, which fought a war in 1962, vie for global energy resources and disagree over border territories. India’s trade deficit with China widened more than 40 percent to $15.8 billion in 2009.
To contact the reporter on this story: Mehul Srivastava in New Delhi at msrivastava6@bloomberg.net; Mark Lee in Hong Kong at wlee37@bloomberg.net
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