ZTE sells security subsidiary amid US probe

Chinese telecommunications giant ZTE (0000.SHE, 0763.HKG) sold a surveillance systems subsidiary, as it and rival Huawei (002502.SHE) come under fire in the US over cyber security concerns, Reuters reported. The decision to sell a 68% stake in ZTE Special Equipment Co, also known as ZTEsec, was made to “focus its resources on its principal businesses in line with the requirements of its strategic development,” the company said. Ten Chinese companies purchased the stake, including Shenzhen Capital Group, according to a September filing with the Hong Kong stock exchange. A US Congressional commitee published a report recommending that ZTE and Huawei be blocked from doing business in the US, since an investigation could not “allay concerns that ZTE is aligned with Chinese military and intelligence activities or research institutes.” ZTE has denied any involvement with such activities.