Tuesday 17 July 2018

Digicel downplays impact of US move against supplier

Denis O’Brien-owned Digicel said much of its ZTE-related infrastructure roll-out was already complete
Denis O’Brien-owned Digicel said much of its ZTE-related infrastructure roll-out was already complete
Donal O'Donovan

Donal O'Donovan

Digicel said it is among operators potentially affected by American-imposed restrictions that ban US firms doing business with China's ZTE Corp, one of the Irish-owned mobile telecoms and communications group's key suppliers.

ZTE was hit by a ban last month from Washington, forbidding US firms from supplying it with components and technology after it was found to have violated US export restrictions by illegally shipping goods to Iran.

In a statement, Digicel said an audit is under way to ensure that it has no relationship with any products which are affected by the US restrictions.

"ZTE is undertaking a complete stock take of all units potentially impacted by the Denial Order," Digicel said.

However, the statement from Denis O'Brien-owned Digicel noted that much of its ZTE- related infrastructure roll-out was already complete.

The statement added that it had "good optionality" to complete all remaining markets - including using alternative suppliers.

Digicel tapped ZTE last year in a global partnership agreement amid a wider cost-cutting programme and as part of an investment roll-out aimed at boosting customers' data access.

ZTE is one of the world's biggest telecommunications equipment makers. The US move against ZTE is also a blow to American component makers like Qualcomm, Microsoft and Intel, who sell it billions of dollars worth of equipment every year.

ZTE also sells handsets to US mobile carriers including AT&T, T-Mobile and Sprint.

Digicel made its announcement yesterday after ZTE Corp said on Wednesday that its main business operations had ceased due to the ban imposed by the US government. The company said it is working to have the ban modified or reversed.

"As a result of the (US-imposed) Denial Order, the major operating activities of the company have ceased," ZTE said in regulatory filings late on Wednesday.

"As of now, the company maintains sufficient cash and strictly adheres to its commercial obligations subject in compliance with laws and regulations," ZTE said.

The US action could be devastating to ZTE.

Analysts have said it will be hard for it to stay competitive even if it finds non-American suppliers. (Additional reporting Reuters)

Irish Independent

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