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Exclusive: Huawei in early talks with U.S. firms to license 5G platform - Huawei executive

[October 19, 2019] By Alexandra Alper

WASHINGTON (Reuters) - Blacklisted Chinese telecoms equipment giant Huawei is in early-stage talks with some U.S. telecoms companies about licensing its 5G network technology to them, a Huawei executive told Reuters on Friday.

Vincent Pang, senior vice president and board director at the company said some firms had expressed interest in both a long-term deal or a one-off transfer, declining to name or quantify the companies.

"There are some companies talking to us, but it would take a long journey to really finalize everything," Pang explained on a visit to Washington this week. "They have shown interest," he added, saying conversations are only a couple of weeks old and not at a detailed level yet.

The U.S. government, fearing Huawei equipment could be used to spy on customers, has led a campaign to convince allies to bar it from their 5G networks. Huawei has repeatedly denied the claim.

Currently there are no U.S. 5G providers and European rivals Ericsson <ERICb.ST> and Nokia <NOKIA.HE> are generally more expensive.

In May, Huawei, the world's largest telecoms equipment provider, was placed on a U.S. blacklist over national security concerns, banning it from buying American-made parts without a special license.

Washington also has brought criminal charges against the company, alleging bank fraud, violations of U.S. sanctions against Iran, and theft of trade secrets, which Huawei denies.

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A Huawei company logo is pictured at the Shenzhen International Airport in Shenzhen, Guangdong province, China July 22, 2019. REUTERS/Aly Song/File Photo

Rules that were due out from the Commerce Department earlier this month are expected to effectively ban the company from the U.S. telecoms supply chain.

The idea of a one-off fee in exchange for access to Huawei's 5G patents, licenses, code and know-how was first floated by CEO and founder Ren Zhengfei in interviews with the New York Times and the Economist last month. But it was not previously clear whether there was any interest from U.S. companies.

In an interview with Reuters last month, a State Department official expressed skepticism of Ren's offer.

"It's just not realistic that carriers would take on this equipment and then manage all of the software and hardware themselves," the person said. "If there are software bugs that are built in to the initial software, there would be no way to necessarily tell that those are there and they could be activated at any point, even if the software code is turned over to the mobile operators," the official added.

For his part, Pang declined to predict whether any deal might be signed. However, he warned that the research and development investment required by continuously improving the platform after a single-transfer from Huawei would be very costly for the companies.

Huawei has spent billions to develop its 5G technology since 2009.

(Additional reporting by Ken Li and Karen Friefeld; Editing by Chris Sanders and Sandra Maler)

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