SHANGHAI – Chinese telecom firm ZTE, accused by American lawmakers of doing business with Iran and posing a security threat, says US network giant Cisco Systems has ended a cooperation deal with it.
In a statement late Tuesday, ZTE confirmed media reports that Cisco earlier this year scrapped a 2005 strategic cooperation agreement which included purchases of equipment from the US company.
“In July 2012, Cisco informed the company (ZTE) that it terminated the strategic cooperation agreement entered with the company in 2005, mainly in relation to the company’s purchase of routers and other products,” ZTE said.
Soon after the agreement was signed, ZTE described the cooperation in far broader terms, saying it included jointly expanding in telecommunications markets in China and the rest of Asia.
ZTE in its latest statement said it would not be hurt by Cisco’s move since it had alternatives to the US firm’s equipment.
Media reports said the termination came after Cisco found ZTE had sold its equipment to Iranian companies in violation of US sanctions. A top ZTE executive denied the claims last month.
Cisco in China could not be reached for comment on Wednesday.
The announcement followed a US congressional investigation that concluded ZTE and another Chinese telecom firm, Huawei, pose a security threat to the United States and should be barred from US contracts and acquisitions.
The report by the House Intelligence Committee, officially released on Monday, said the two firms “cannot be trusted” to be free of influence from Beijing and could be used to undermine US security.
ZTE said sales revenue from the US market was “relatively small” so any US moves would not hit its financial results, according to the statement issued through the Hong Kong stock exchange.
In a separate statement also released Tuesday, ZTE said its equipment was “safe” for US telecom infrastructure.
Last month US Representatives Sue Myrick and Frank Wolf released a letter expressing concern that ZTE may have supplied equipment to Iran, in violation of a US ban.
Speaking at a US Congressional hearing in September, Zhu Jinyun, ZTE’s senior vice president for North America and Europe, denied the claim.
In afternoon trading, ZTE stock was down 0.53 percent to 11.34 yuan ($1.8) on the Shenzhen stock exchange, but up 5.38 percent to HK$12.54 ($1.6) in Hong Kong where it is also listed.