U.S. SINKS PACIFIC UNDERSEA CABLE PROJECT DUE TO CHINA THREAT

A World Bank-led project declined to award a contract to lay sensitive undersea communications cables after Pacific island governments heeded US warnings that participation of a Chinese company posed a security threat, two sources told Jonathan Barrett and Yew Lun Tian of Reuters.

The former Huawei Marine Networks, now called HMN Technologies and majority-owned by Shanghai-listed Hengtong Optic-Electric Co Ltd., submitted a bid for the $72.6 million project priced at more than 20% below rivals Alcatel Submarine Networks (ASN), part of Finland's Nokia and Japan's NEC, the sources said.

The East Micronesia Cable system was designed to improve communications in the island nations of Nauru, Kiribati, and Federated States of Micronesia (FSM), by providing underwater infrastructure with a far greater data capacity than satellites.

Two sources with direct knowledge of the tender told Reuters that the project reached a stalemate due to security concerns raised within the island nations over HMN Tech's bid.

The project's planned connection to a sensitive cable leading to Guam, a US territory with substantial military assets, heightened those security concerns.

"Given there was no tangible way to remove Huawei as one of the bidders, all three bids were deemed non-compliant," one of those sources said.

The source said that HMN Tech was in a strong position to win the bid due to the terms overseen by the development agencies, prompting those wary of Chinese involvement to find an expedient solution to end the tender.

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