Tuesday, July 2, 2019


Sometime in Nortel’s final chapter Huawei offered to take it over, claims Huawei founder Ren Zhengfei.

As a Canadian technology giant neared collapse, its fast-rising Chinese competitor moved in, ready to buy what was left of the company it was about to trounce.
Huawei was still a little-known Chinese manufacturer of communications equipment in 2009, when Nortel was in the midst of bankruptcy proceedings. Only later would Nortel’s former security adviser accuse Huawei of benefiting from years of Chinese hacking into the Canadian company’s systems and stealing confidential information.
But sometime in Nortel’s final chapter, Huawei offered to take it over, the Chinese company’s founder, Ren Zhengfei, told The Globe and Mail in an interview.
“I told Mike that I wanted to acquire Nortel,” Mr. Ren said, referring to Mike Zafirovski, the man who was then Nortel’s chief executive officer.
The deal did not happen, Mr. Ren said, because Mr. Zafirovski “replied by saying that he wanted to be the controlling shareholder of Huawei,” Mr. Ren said. “Nortel was already going into bankruptcy, but they still insisted on taking a controlling stake in Huawei.”
The Chinese executive recalled asking, “Where will you get the money?” Nortel filed for bankruptcy protection on Jan. 14, 2009.
Mr. Zafirovski said “he could go out looking for money,” Mr. Ren recalled. “I said it’s impossible.”
Mr. Zafirovski did not respond to multiple requests for comment. And it’s not clear whether any such takeover could have been approved.
“I don’t think any approach from Huawei would have been taken very seriously. The U.S. government was too important as a customer,” said John Manley, the former Canadian deputy prime minister who also served on the Nortel board. Mr. Manley did not recall any specifics of a Huawei proposal.
The idea that Huawei sought to acquire the collapsing remains of Nortel is also likely to be seen as bittersweet by those who lay blame for the disintegration of the Canadian telecommunications champion partly at the feet of Chinese intellectual property theft. Brian Shields, Nortel’s former security adviser, has said internet logs show hackers from China had access to Nortel’s systems for years, at a time Huawei was rapidly developing some similar products.

Related: Huawei’s CEO has a message for Canada: Join us and prosper in the 5G future

Nortel at its peak employed nearly 100,000 people, with annual revenues of US$30-billion. Huawei today employs 194,000 with revenue last year of US$107-billion.
Mr. Ren’s account stands at odds with a report in the Ottawa Citizen, which detailed how in May of 2009 a group of former Nortel executives, with the help of former CEO Bill Owens, convinced executives at Huawei to make a minority investment in an operating company they had formed to buy up Nortel’s remaining assets.
The idea died when Huawei’s board rejected it, the Citizen reported.
Mr. Ren said discussions with Nortel did not progress far enough to settle on an acquisition price.
Huawei eventually hired a number of former Nortel scientists, some of whom became key figures in the company’s Ottawa research facility, where it did some of the science that underpins its fifth-generation cellular network technology.
When Nortel fell apart, Huawei recruited, Mr. Ren said.
“Back then, Nortel didn’t have the technology we are talking about today; they only had talented people. When such talented people were out of work, it was just natural that they would find other jobs,” he said.
“When Nortel collapsed, 3G had just started developing in the world. As the industry evolved from 3G to 4G, and then to 5G, those people also improved themselves during the process. What they have contributed to Huawei is what they had in their minds. It’s definitely not about intellectual property theft.”
Mr. Ren denied that his company had anything to do with Nortel’s failure.
“Nortel suffered and collapsed because the bubble economy burst,” he said.

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