As Sweden hesitates over ban, Huawei seeks financial assistance from the Chinese state

Sweden is already reviewing its Huawei ban, but the Chinese vendor is still reportedly looking to raise billions by flogging its Honor smartphone unit to the Chinese state.

With Huawei having challenged its decision to make the imminent 5G spectrum auction conditional on the winners not using Huawei or ZTE kit, Swedish telecoms regulator, PTS issued the following statement yesterday: “The Administrative Court in Stockholm has today decided that the license condition relating to Huawei in the allocation of the 3.5 GHz and 2.3 GHz bands will not apply for the time being (inhibition).

“PTS has therefore informed the operators who are approved to participate that the planned auction will not start on Tuesday 10 November.  PTS will continue to analyze the administrative court’s decision and review the possibilities of starting the auction as soon as possible.”

On one level this is simply a matter of following due process as it would be wrong to proceed with the auction when its legitimacy is still in question. On the other. It does seem to indicate that PTS made a fairly major mistake in in conflating the Huawei decision with the 5G spectrum auction. We’re not aware of any other countries trying this move and now Sweden can’t move ahead with its 5G plans until this is resolved.

Huawei will presumably perceive this as a minor win in its bid to force the EU’s hand on the legality of banning it from the bloc’s telecoms networks, but it seems to have more immediate cashflow issues to deal with. Reuters has been suggesting Huawei might flog its standalone Honor smartphone business for a few weeks and it looks like it was onto something.

Now, those handy ‘people with knowledge of the matter’ have told Reuters that Huawei expects to raise around $15 billion in return for handing Honor over to a consortium that includes the government on Shenzhen – i.e. the Chinese state. The other major partner is Huawei’s smartphone distribution partner Digital China.

While the superficial reason for this move is to enable Honor to circumvent US sanctions affecting Huawei’s core smartphone operations, it also seems like a pretty handy way to launder a massive injection of state cash. The underlying reason behind western distrust towards Huawei is that it’s suspected of being too close to the Chinese state and moves like this will surely only serve to strengthen those suspicions.