Huawei, the Chinese telecommunications equipment maker and services provider, has won a £120 million contract to manage mobile telco Three’s core network for five years.
The news follows a report in the Wall Street Journal on Friday, claiming that a European Commission investigation has accused Huawei the company and compatriot ZTE of "inflicting damage on European producers [of mobile telecommunications equipment] by dumping products onto the European market at rock-bottom prices".
WSJ reported that an internal document, written earlier this year, says unfair support from China’s government help ZTE and Huawei to offer substantially cheaper products than European mobile infrastructure vendors such as Ericsson, Alcatel-Lucent and Nokia Siemens Networks.
Huawei denied the claim, telling the WSJ that its "success is because we enable our customers in reducing overall operating costs through smart, technological innovation, not by pricing".
ZTE said that it had not been contacted by any authority on this matter. "As a public company listed on both the Hong Kong and Shenzhen stock exchanges, ZTE is committed to transparent operations and being in full conformity with trading regulations of the WTO and local markets," it said in a statement.
"Moreover, ZTE has been successful in global markets with its innovative design, quality service and its ability to customise products for clients at short notice. ZTE receives no illegal or hidden subsidies, nor does it dump products in any markets where it operates."
Winning the Three contract extends Huawei’s penetration of the UK market. Earlier this year, the company won a similar, five-year deal with O2.
At Three, Huawei will replace incumbent provider Ericsson.
The UK government has welcomed inward investment from Huawei. In September, the company announced that it would be investing £2 billion in the country over the next five years. This includes locating "a number of global centres of technical and financial excellence" here in the UK.
"The British Government values the important relationship with China, both countries have much to offer each other and the business environment we are creating in the UK allows us to maximise this potential," said prime minister David Cameron at the time.
To date, the UK government’s position has contrasted with that of the US government, which has questioned the security of Huawei and ZTE’s products.
In October, however, the parliamentary Intelligence and Security Committee launched an investigation in to the relationship between Huawei and UK telco BT.
"We are looking into the relationship that has developed between Huawei and British Telecom and the implications for the UK," said Sir Malcolm Rifkind told The Guardian at the time. "We wanted to look at the historical background to that contract, to what extent there were security concerns at the time, whether and to what extend the British government were involved in these decisions, and whether there have been any causes for concern that have arisen since Huawei became involved in our telecoms infrastructure."
