Original URL: http://www.theregister.co.uk/2011/07/19/huawei_to_win_ufb_contract/

Huawei circling NZ’s UltraFast Broadband contract

Buttering up the Kiwis

By Natalie Apostolou

Posted in Business, 19th July 2011 23:33 GMT

Huawei Technologies could soon be named as preferred supplier for New Zealand’s NZ$1.5 billion Ultrafast Broadband Network deployment.

The UFB project, run by government-owned Crown Fibre Holdings, had stalled on its year-old equipment vendor selection, but is understood to be close to an announcement.

The network-in-waiting is set to deliver fibre-optic broadband to over 75 per cent of the New Zealander population within the next ten years.

The Register has been told the Chinese vendor will soon achieve preferred supplier status to Crown Fibre, making it vendor of choice for companies rollout out the 33 city-based networks. Crown Fibre would, however, retain the right to use other vendors bidding into the network, such as Alcatel-Lucent and Ericsson.

This time last year, the government and Huawei were hosing down speculation that the vendor had already made significant headway in securing the contract after prime minister John Key retuned from a trip to Shanghai World Expo. At the time, Key Key told TVNZ that the company could play "a major role" in the Crown fibre roll-out.

“They've got a lot of expertise in that area, Huawei is a big player, they're bigger round the world, they've got a huge partnership in the United Kingdom for instance. No one's saying they would be the final selected partner in New Zealand but they've certainly got the capacity if they wanted to, to come in and look at doing something like that.”

Sources close to the deal now claim that Huawei’s place has been solidified via the FTA agreement between New Zealand and China, which would also ultimately help bolster New Zealand’s dairy sector and other export industries.

In the past, Key has stated his preference for joint ventures as the basis for Chinese investment in New Zealand. While opposing direct foreign investments in the country’s agriculture industry he is supportive of joint investments in new agriculture developments in addition to offshore farming ventures.

Yesterday, dairy giant Fonterra announced that it will spend US$40 million developing a new 40 hectare dairy farm in China, its third farming development under the FTA.

New Zealand and China have agreed to double their trade to about $20 billion yearly within five years.

Huawei has been strongly lobbying the New Zealand government over the last 12 months, but some of its efforts have backfired. In September, the vendor held a three day UFB focused event, that included technical workshops, an exhibition, and a day-long conference opened by Crown Fibre Holdings chief executive Graham Mitchell and featuring an impressive speaker line up. However, the vendor was forced to defend its actions after the Labour Party alleged the company had compromised Crown Fibre Holdings board member Murray Milner by hiring him as a consultant. Milner was also a keynote speaker at the event.

Huawai claimed that Milner’s consultancy was engaged for work relating only to retail services and not directly targeting the government's UFB project.

Last month, in Australia, Huawei took steps to localize the company with the creation of a local board decked with high profile political influencers including former Victorian Labor Premier John Brumby, former Liberal party foreign minister Alexander Downer and Royal Australian Navy veteran John Lord as chairman. ®