The Chinese company announced it’s signed a 5G development deal with MTS, Russia’s biggest mobile operator. Timed to coincide with a three-day visit by Chinese president Xi Jinping to Moscow, the deal signals a desire for a closer relationship between the two Asian powers, and it unites the fates of two of their respective leading companies.
It comes at a critical time for the Shenzhen-based company, which is now on the frontline in an escalating trade war between America and China. The United States is waging a campaign against Huawei, banning it from its own 5G networks and cutting it off from American software and components that it needs for its smartphones and network equipment business.
Huawei is the world’s biggest telecom equipment supplier and the No. 2 smartphone brand behind Samsung. But the US restrictions pose a huge threat to its business and could delay the global rollout of 5G. The next generation of ultra fast networks will power everything from self-driving cars to networked robots.
For Huawei, securing this deal is a welcome reprieve from the torrent of bad business news that was triggered by US president Trump’s harsh rebuke and prohibition. This Monday, it was revealed that Huawei is selling off its undersea cable business, which analysts interpreted as being at least partially motivated by the increasing toxicity of the Huawei brand. At the same time, Huawei is also reducing smartphone production orders with Foxconn, owing to its loss of the Android license from Google that allows it to ship devices with preloaded Google apps and services.
On the 5G front, Japan’s SoftBank has opted for Nokia and Ericsson equipment instead of Huawei, which had been a provider of 4G infrastructure for the carrier. The tumult in Huawei’s business-to-business relations looks set to continue for a while, but for today at least, the company has a significant new agreement to celebrate.
Wireless carriers in Japan and the United Kingdom have postponed the launch of new Huawei smartphones.