Huawei’s ongoing efforts to land a major equipment deal with US operator Sprint Nextel have been dealt a major blow following moves by US lawmakers to block the deal. In a letter to the US Senate written last week by Senator Jon Kyl – and signed by seven other Senators – the politicians said a deal between Huawei and Sprint would create “substantial risk” for US companies and undermine national security, due to Huawei’s links with the Chinese military and alleged links with regimes in Iran and elsewhere. “At worst, Huawei’s becoming a major supplier of Sprint Nextel could present a case of a company, acting at the direction of and funded by the Chinese military, taking a critical place in the supply chain of the US military, law enforcement and private sector,” the letter said. Kyl also quoted from a press release issued by the Chinese embassy in Iran, which said Huawei had gained the “trust and alliance of major [Iranian] governmental and private entities,” and hinted at further links with Saddam Hussein’s former regime in Iraq and the Taliban. According to a Financial Times report, Huawei said it was “disappointed to learn that old mischaracterisations about the company still linger,” and claimed it followed UN trade compliance regulations in all the countries it operated in, including the US.

The Sprint deal – thought to involve the supply of mobile broadband network equipment – would represent Huawei’s biggest push into the US since it was forced in 2008 to abandon a joint US$2.2 billion bid for US tech firm 3Com because of security concerns. The same problems are thought to be responsible for Huawei reportedly losing out on two major deals in the US last month: Motorola’s networks business (which was acquired by NSN) and software supplier, 2Wire (acquired by Pace). Huawei is understood to be considering making several dramatic concessions to prove its transparency to the US authorities, including going public on a US or Hong Kong exchange, shaking up its management, or creating a US company that is independent of Chinese control.