White House dismisses idea of U.S. buying Nokia, Ericsson to challenge Huawei

[February 08, 2020]  By David Shepardson

WASHINGTON (Reuters) - U.S. Vice President Mike Pence on Friday and the top White House economic adviser dismissed an unusual suggestion from U.S. Attorney General William Barr that the United States consider taking control of two major foreign rivals of China-based Huawei Technologies Co Ltd.

Barr, a former general counsel at Verizon Communications Inc, said on Thursday the United States and its allies should consider taking a "controlling stake" in Finland's Nokia and Sweden's Ericsson to counter Huawei's dominance in next-generation 5G wireless technology.

White House economic adviser Larry Kudlow added later on Friday that the United States was working closely with Nokia and Ericsson, saying the companies' equipment was essential to the buildout of 5G infrastructure.

But he said the "U.S. government is not in the business of buying companies, whether they're domestic or foreign," adding that "there's nothing to prohibit American tech companies from acquiring" them.

Pence earlier in the day had suggested an alternative approach when asked by CNBC for his response.

"Great respect to Attorney General Barr, but we believe the best way forward is what Ajit Pai announced just over the last several days," Pence said, referring to the Federal Communications Commission's chairman's efforts to free up more spectrum for 5G wireless use.

"That's the plan the president has endorsed and will be carrying forward," Pence said, adding that the United States can expand 5G "by using the power of the free market and American companies."

The White House, and representatives for Barr and Pai all declined to comment.

Shares in Nokia closed 4% higher on the New York Stock Exchange and Ericsson shares were up nearly 5.4% on Nasdaq. Both companies declined to comment.

Vice President Mike Pence arrives in front of Senate Majority Leader Mitch McConnell for U.S. President Donald Trump's State of the Union address to a joint session of the U.S. Congress in the House Chamber of the U.S. Capitol in Washington, U.S. February 4, 2020. REUTERS/Leah Millis/POOL

Nokia and Ericsson have a combined market capitalization of about $53 billion and it is unclear what source of funds the U.S. government could potentially tap to take stakes in the firms or if foreign regulators would approve.

In a remarkable statement underscoring how far the United States may be willing to go to counter Huawei, Barr on Thursday disclosed proposals "by the United States aligning itself with Nokia and/or Ericsson."

Barr said the alignment could take place "through American ownership of a controlling stake, either directly or through a consortium of private American and allied companies."

Barr said that "putting our large market and financial muscle behind one or both of these firms would make it a far more formidable competitor and eliminate concerns over its staying power, or their staying power."

"We and our closest allies certainly need to be actively considering this approach," he added.

(Reporting by David Shepardson and Jeff Mason; Editing by Richard Chang)

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