Verizon Communications Inc. (NYSE:VZ) has announced that it will no longer sell Huawei phones due to a lot of political pressure due to security fears by the U.S government.
The U.S carrier has decided to slash its contract with Huawei, thus crushing the Chinese manufacturer’s hopes of securing a solid market in the U.S. The decision comes a few weeks after a similar decision by AT&T Inc. (NYSE:T) which also terminated a deal to sell Huawei’s flagship handset, the Huawei Mate 10. The decision was also influenced by political pressure from the U.S government. Some U.S agencies and lawmakers are concerned that handsets from Chinese manufacturers might be fitted with spying features that might compromise the secrets of the U.S.
“The next wave of wireless communication has enormous economic and national security implications. China’s participation in setting the standards and selling the equipment raises many national security issues that demand strict and prompt attention,” stated Michael Wessel who is a member of the US-China security review commission.
Huawei has established itself as one of the major manufacturers with premium devices that compete with flagships of major companies such as Apple and Samsung. For example, the Huawei Mate 10 was well positioned to take on the likes of the iPhone X, Samsung Galaxy S8, and the LG V30 among other best flagships of 2017. This shows that the Chinese manufacturer is right up there with the best players in the market.
Huawei has been marketing the Mate 10 Pro as one of the very few devices that can handle the upcoming 5G networks that are currently being built by carriers in the U.S. The feature places the company in an advantageous position over rivals and this could allow it to secure a bigger piece of the market in the U.S.
The concerns that the U.S government has been expressing against potential spying by China have been a huge stumbling block for carriers in the U.S in their attempts at 5G. Both Verizon and AT&T have been planning to roll out 5G networks this year.
Verizon stock closed Monday’s trading session at $53.99.