(Reuters) – The US government moved on Monday to block China Mobile from offering services to the US telecommunications market, recommending its application be rejected because the government-owned firm posed national security risks.
The Federal Communications Commission (FCC) should deny China Mobile’s 2011 application to offer telecommunication services between the United States and other countries, the National Telecommunications and Information Administration (NTIA) said in a statement posted on its website.
“After significant engagement with China Mobile, concerns about increased risks to US law enforcement and national security interests were unable to be resolved,” said the statement, which quoted David Redl, assistant secretary for communications and information at the US Department of Commerce, which NTIA is part of.
China Mobile, the world’s largest telecom carrier with 899 million subscribers, did not immediately respond to Reuters’ request for comment.
The move by US President Donald Trump’s administration on China Mobile comes amid growing trade frictions between Washington and Beijing. The United States is set to impose tariffs on $34 billion worth of goods from China on July 6, which Beijing is expected to respond to with tariffs of its own.
And ZTE Corp, China’s No. 2 telecommunications equipment maker, was forced to cease major operations in April after the US slapped it with a supplier ban saying it broke an agreement to discipline executives who conspired to evade US sanctions on Iran and North Korea. ZTE is in the process of getting the ban lifted and announced a new board last week.
China Mobile Communications Corp, a state-controlled firm, owned almost 73 percent of China Mobile as of December, according to Thomson Reuters data.
China Mobile’s shares fell 2.6 percent yesterday morning to their lowest in more than four years.
But Ramakrishna Maruvada, a Singapore-based analyst with Daiwa Securities, said the impact of the ruling on China Mobile’s business is “very tiny” since it derives most of its income from the domestic market.
