Huawei to sell lower- end smartphone unit Honor

Huawei plans to sell budget- brand smartphone unit Honor in a 100- billion yuan ($ 15.2bn) deal to a consortium led by handset distributor Digital China and the government of its hometown of Shenzhen, people with knowledge of the matter told Reuters.

The plan comes as US restrictions on supplying Huawei force the world’s second- biggest smartphone maker after South Korea’s Samsung Electronics to focus on high- end handsets and corporate- orientated business, the people said.

It also indicates little expectation for any swift change in the US perception of Huawei as a security risk following a new US administration, one of the people said. The all- cash sale will include almost all assets including brand, research & development capabilities and supply chain management, the people said. Huawei could announce it as early as Sunday, one of the people said.

Main Honor distributor Digital China will become a top- two shareholder of sold- off entity Honor Terminal with a near- 15 percent stake, said two of the people. Honor Terminal was incorporated in April and is fully owned by Huawei, the corporate registry showed. Digital China, which also partners Huawei in businesses such as cloud computing, plans to finance the bulk of the deal with bank loans, the two people said. It will be joined by at least three investment firms backed by the government of financial and technology hub Shenzhen, with each owning 10 percent to 15 percent, they said. After the sale, Honor plans to retain most of its management team and 7,000plus workforce and go public within three years, the people said, declining to be identified due to confidentiality constraints.