Telekom Malaysia has inked a new R&D partnership that is likely to rankle a few hawks over in the US.

Reason being, it is with China’s ZTE, which as far as the US and its allies are concerned is up there with Huawei when it comes to being a vendor non grata.

Under the terms of their memorandum of understanding (MoU), TM and ZTE will collaborate on new products and services, as well as go-to-market strategies, commercialisation, and networking across multiple market segments, not only in Malaysia but the surrounding region as well.

The partnership also covers network and technology planning, and digital transformation combining software-as-a-service (SaaS), platform-as-a-service (PaaS), and anything-as-a-service (XaaS).

The partnership will run for at least three years.

“We are pleased to partner with ZTE once more in providing new innovations that will serve today’s digital customers and industries. Spearheading these efforts will be TM’s R&D arm who will provide hardware testing and design enhancement, consultation on digital platform technologies, as well as integration solutions to ensure our offerings are market-ready,” said TM’s group CEO Dato’ Imri Mokhtar, in a statement.

“We’re confident that our collaboration will bring forth new innovations and solutions to address the growing needs of today’s digital markets,” added ZTE managing director Steven Ge. “ZTE is also committed to supporting TM’s digital transformation and talent ecosystem growth through our global expertise and resources.”

Whatever the partnership’s stated aims might be, there are some in the US who are likely to cast this as an insidious attempt by Beijing to compromise one of Washington’s closest allies in the region.

Reports in early May alleged that the US and the EU sent separate letters to the Malaysian government warning it against taking any measures that might pave the way for Huawei equipment to find its way into 5G networks there.

The letters were prompted by Malaysia’s decision to review the tender process that led to Ericsson being chosen as the sole supplier for the country’s state-run wholesale 5G network. Malaysian Prime Minister Anwar Ibrahim questioned the decision to give Ericsson the contract back when he was in opposition, arguing that going with Huawei would have been cheaper.

Just days after the US and EU’s diplomatic warnings were sent, Malaysia’s Communications Minister Fahmi Fadzil announced that the government will go ahead with plans to create a second national shared 5G network to compete with the first and to provide redundancy.

That immediately set tongues wagging about which vendors might be in line to provide the kit.

In an interview with Bloomberg earlier this week, Fadzil insisted that it is up to Malaysia’s telcos to decide which equipment makers to work with, while adding that the government will take into consideration the warnings issued by the US and others about partnering with Chinese suppliers.

“The government itself is not entering into any contractual obligations with any of these network equipment providers,” he said in the report. “The ones who need to be convinced are the telecommunication companies, the mobile network operators.”

TM’s decision to conduct R&D in partnership with ZTE suggests that Chinese suppliers are doing a pretty good job of convincing the country’s telcos to work with them. Industry watchers will be keen to see whether this deal is a one-off or a sign that – as far as Huawei et al goes – Malaysia is open for business.

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