Report: Huawei mulling IPO

Huawei has reached out to investment banks to explore the possibility of an initial public offering but has made no decision on whether to do so, according to multiple reports.

The reports, in both the Wall Street Journal and Reuters, said the privately held Chinese vendor has reached out for advice on how and where to list its shares. The move is seen as a way for the company to become more transparent and assuage security concerns as part of an effort to win more contracts in the United States, according to the Journal. Both reports cited unnamed sources.

"We haven't ruled out the possibility of a listing," a source close to the company told Reuters. "We've always been in touch with banks, but I don't think anything has been decided." William Plummer, Huawei's vice president of external affairs based in the United States, told the Journal that Huawei doesn't comment on market rumors, but "if and when such a thing happened it would be when it makes commercial sense."

As the Journal noted, an IPO would lay bare Huawei's ownership structure, sources of revenue, risk factors and whether it receives formal support from the Chinese government. Huawei may not be willing to make those moves, but has in recent months taken steps to become more transparent. In September Huawei said it would never cooperate with any spy agency. And in April Huawei said founder and CEO Ren Zhengfei would split the role of CEO with three executives on a rotating basis.

The House Permanent Select Committee on Intelligence is expected to release on Monday a report detailing the results of its investigation into possible national security concerns posed by Huawei and ZTE. The committee grilled executives from Huawei and ZTE at a hearing in September, where the companies tried to allay lawmakers' fears. ZTE is a publicly traded company.

Plummer told the National Journal that the investigation was based on "myth and innuendo" and unfounded political concerns. "It's politically driven, I get that," he said. "But Huawei is Huawei. Huawei isn't China. Any suggestion otherwise is really unfortunate."

The two companies have repeatedly denied links to the Chinese military or receiving illegal help from the Chinese government. Both have had minimal success securing network infrastructure contracts from Tier 1 carriers in the U.S. market. However, both companies' device businesses have found favor with U.S. carriers.

For more:
- see this WSJ article (sub. req.)
- see this separate WSJ article (sub. req.)
- see this Reuters article
- see this National Journal article

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