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US & UK Government Warns Against ZTE A Key Telstra Partner

The U.S. and British Governments have overnight warned Australian officials to stay well clear of ZTE a key smartphone manufacturing partner of Telstra because of national-security concerns.

Currently ZTE manufacture tens of thousands of Telstra branded smartphones, senior executives at Telstra’s mobile division are known to have made regular trips to China as guests of ZTE who are now facing mounting problems in the UK and USA, getting their mobile phones ranged because of security concerns, but not at Telstra.

British cybersecurity officials warned U.K. phone carriers to stay clear of ZTE’s equipment and services, citing national-security concerns.

The U.S. Commerce Department said it has banned American companies from selling ZTE products and smartphones, because the company violated the terms of a deal last year settling allegations of sanctions busting.

Last month ChannelNews questioned the double counting of sales numbers by ZTE and Telstra, after IDC claimed that ZTE now had 5.4% of the Australian smartphone market.

IDC whose numbers relating to notebook sales have also been questioned has refused to say whether an investigation revealed that the Chinese Company had counted both their own branded devices and those of Telstra in submitting numbers to the US owned research Company.

The Wall Street Journal reports that the British move came as both U.S. national security officials and Congressional leaders have called on American agencies and U.S. allies to strengthen telecom infrastructure from the threat of cyber espionage, particularly from China.

Both Huawei and ZTE are now on the Federal Governments watch list after the British Government last night warned UK carriers to not buy ZTE made products.

Both Huawei and ZTE have repeatedly denied they pose national-security threats.

ZTE trades publicly on stock exchanges in Shenzhen and Hong Kong, though one of its largest investors is a holding company with ownership stakes held by Chinese state-owned companies.

ChannelNews is aware that ZTE executives went out of their way to foster a relationship with Telstra executives. previous Telstra managers were given access to exclusive Chinese golf clubs while being facilitated at expensive 6-star hotels.

Currently Huawei is pitching to build out the new Optus and Vodafone 5G networks.
The US Commerce Department said last night that ZTE had violated the terms of a previous settlement alleging it illegally evaded sanctions. The department said ZTE agreed last year to combined civil and criminal penalties and forfeiture amounting to $1.19 billion, for allegedly shipping sanctioned telecom gear to Iran and North Korea.

The agency said Monday it has since determined ZTE made false statement during and after the settlement talks and that the company hadn’t disciplined executives involved, as agreed, and instead paid them full bonuses.

It said as a result, ZTE would no longer be able to buy components from U.S. manufacturers. That could pose a significant threat to ZTE’s supply chain. The company uses American parts, like chips made by Qualcomm, for its smartphones. These are the same processors found in Telstra branded smartphones made by ZTE.

Telstra has not commented for this story.

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