Telstra ends sale of ZTE white-labelled devices

The first domino falls after the Chinese manufacturer announced it is ceasing its major operations.
Written by Chris Duckett, Contributor
(Image: Telstra)

Australian telco behemoth Telstra has reacted quickly to ZTE's notice [PDF] that it is ceasing operations.

Posted on Wednesday, ZTE said "the major operating activities of the company have ceased" while it attempts to have sanctions placed on it by the US government removed or modified.

ZTE previously said the ban on US companies selling to it will threaten the survival of the company and its partners, including some US companies.

Due to the cessation by ZTE, Telstra said it would be forced to end the sale of its white-labelled products.

"We are working with our device partners to source alternative models as quickly as possible to help meet the needs of customers. We want to make sure any device we offer customers is available through all of our stores," Telstra said in a blog post.

"We are hopeful that ZTE will be able to reach a resolution to this matter soon, so that we can recommence selling Telstra-branded ZTE devices."

In all, Telstra will stop selling 19 Telstra-branded ZTE-manufactured phones, and three mobile broadband devices.

Last month, the UK National Cyber Security Centre reportedly sent a letter to British telcos warning of the risks of using ZTE equipment, which would create national security risks that could not be mitigated against.

In February, the heads of the CIA, FBI, NSA, and the director of national intelligence to the Senate Intelligence Committee also recommended Americans not use products from Huawei and ZTE.

"We're deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don't share our values to gain positions of power inside our telecommunications networks," FBI Director Christopher Wray said at the time.

"That provides the capacity to exert pressure or control over our telecommunications infrastructure. It provides the capacity to maliciously modify or steal information. And it provides the capacity to conduct undetected espionage."

ZTE was previously fined $1.2 billion by the United States for directly, or through third-party distributors, shipping $32 million worth of products containing American-made equipment to Iran between 2010 and 2016 without the proper licensing.

The latest ban from the United States was issued after the US Department of Commerce said ZTE lied to the Bureau of Industry and Security about disciplinary actions supposedly enforced on senior employees relating to the illegal shipments, and paid full bonuses to employees who had engaged in illegal conduct.

"ZTE misled the Department of Commerce. Instead of reprimanding ZTE staff and senior management, ZTE rewarded them. This egregious behavior cannot be ignored," US Secretary of Commerce Wilbur Ross said.

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