Huawei Seeks Compromise Over Late Deliveries

The Chinese equipment maker wants Thailand's CAT Telecom to negotiate so Huawei can avoid a possible $618 million fine for missing a deadline

Huawei Technologies is calling on Thailand's CAT Telecom to strike a compromise over the late delivery of a 7.1b baht ($218.4 million) CDMA mobile network, saying it cannot accept the severe fine proposed by the state telecom enterprise.

The Chinese equipment maker also urged CAT to seek an outcome that would benefit both sides, instead of heavy fine.

The CAT Telecom board had agreed to impose a severe fine against Huawei for more than the project's value for late delivery of the second-phase installation involving 800 CDMA base stations in 51 provinces by January 26 of this year.

The figure to be announced on September 11 could be up to 20 billion baht ($618 million).

The board has also threatened to take legal action against Huawei if it fails to pay a penalty by a fixed deadline.

"We don't understand why CAT needed to assess a penalty against us since we were not in breach of the contract," said Victor Wang, president and CEO of Huawei Technologies (Malaysia), who is responsible for the Asia Pacific region.

"We cannot accept such heavy amount and we also don't expect to be fined," he said.

Wang said he met with CAT executives yesterday and proposed a compromise. He declined to elaborate on the details, as the company still has received no official statement from CAT over the fine.

Wang also said that the dispute centred on a misunderstanding about the delivery deadline.

He said the state agency acknowledged that Huawei had committed to deliver the full network installation, including complementary upgraded high-speed data chipsets, by January 26 of this year.

For its part, Huawei proposed to deliver the network infrastructure by December 2006 and the data software by January 2008.