Bloomberg News

Cisco Ends Sales Partnership With ZTE Amid Spying Concerns

October 08, 2012

ZTE Falls Most Since 2008 as Net May Drop 80%

Cisco Systems Inc., the largest maker of networking equipment, ended a partnership with ZTE Corp. amid concerns over the Chinese company’s alleged sale of equipment to an Iranian company. Photographer: Adam Dean/Bloomberg

Cisco Systems Inc. (CSCO:US), the largest maker of networking equipment, ended a partnership with ZTE Corp. (763) amid concerns over the Chinese company’s alleged sale of equipment to an Iranian company.

“Cisco has no current relationship with ZTE,” John Earnhardt, spokesman for San Jose, California-based Cisco, wrote in an e-mailed statement today.

ZTE, along with Huawei Technologies Co., provides opportunities for Chinese intelligence services to tamper with U.S. telecommunications networks for spying, according to a U.S. congressional report released today. ZTE refused to answer questions about its interactions with China’s government, as well as questions concerning sales in Iran and other countries that are targets of U.S. sanctions, according to the report.

ZTE sold to an Iranian telecommunications company a surveillance system capable of monitoring landline, mobile and Internet communications, Reuters reported in March.

Shenzhen-based ZTE had been reselling Cisco products as part of a partnership between the two companies. ZTE’s sales to Iran had included Cisco switches, according to Reuters.

“ZTE is highly concerned with the matter and is communicating with Cisco,” David Dai Shu, a spokesman for ZTE, said in an e-mailed statement. “At the same time, ZTE is actively cooperating with the U.S. government about the probe to Iran. We believe it will be properly addressed.”

Zhu Jinyun, ZTE’s senior vice president for North America and Europe, said at a Sept. 13 congressional hearing that the company conducts “normal business operations in Iran” and is “gradually reducing our present operations and we are not starting any new business operations in Iran.”

Zhu also said that the company hasn’t sold gear to the Iranian government.

Cisco’s severed ties to ZTE were reported earlier by Reuters.

To contact the reporter on this story: Jordan Robertson in San Francisco at jrobertson40@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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