China’s secretive networking giant Huawei weighs an IPO

Telecom infrastructure powerhouse Huawei has reached out to investment banks about a possibility of publicly listing its stock on an international exchange, according to reports from the Wall Street Journaland Reuters. While the news agencies’ sources said no final decision has been made, an initial public offering (IPO) could help the opaque Chinese equipment vendor with its long-sought goal of cracking the US infrastructure market.

US lawmakers and regulators’ biggest beef with Huawei has been over security and its alleged ties to the Chinese military. Though Huawei has dismissed those allegations, it has said on many occasions that those perceptions have killed off lucrative deals with US operators that it should have won.

For instance, Huawei VP of external affairs Bill Plummer recently told GigaOM that Huawei was practically a shoe-in to become the third vendor in Sprint’s $4.5 billion LTE build and network overhaul,(s s) but due to government pressures it was booted from list of finalists. Instead, the contract went to Samsung. “We were the most competitive offering for Sprint in terms of technology and total cost of ownership, but non-market forces dictated the result,” Plummer said.

Though Huawei has had run-ins with the Australian government as well as the US, it hasn’t faced the same obstacles in other regions. In fact, Huawei is now  the second largest provider of telecom equipment in the world and in the first half of this year it actually beat market leader Ericsson(s eric) in total revenues.

Huawei hasn’t exactly been banned from the US. It’s been making progress selling inexpensive carrier-branded smartphones here, and over the summer it revealed its most significant contract to date: it’s building T-Mobile’s MyTouch line of Android handsets. But on the infrastructure side it’s only landed a handful of small deals, and some of those – like its WiMAX contract with Clearwire(s clwr) – have fizzled out.

As the Journal pointed out, a public listing on a US or international exchange wouldn’t silence all Huawei critics, but it would lay bare the company’s finances  and ownership structure. The more Huawei looks and acts like a Western company, the more it would get treated like one – or so the logic goes. But going public hasn’t exactly been a boon to fellow Chinese vendor ZTE, which is having many of the same troubles with the US government, despite its listings on the Shenzhen and Hong Kong stock exchanges.

There’s also a question of whether the biggest US opportunity has already passed Huawei by. The telecom world is one characterized by tight carrier-vendor bonds. Every decade or so a new generation of network of emerges, which gives carriers the opportunity to sever old bonds and forge new ones. LTE is a good example. The transition to 4G in the US, saw a big shakeup in vendors: Motorola and Nortel disappeared from the scene while Ericsson and Cisco(s csco) emerged as the dominant suppliers of radio and core networks, and Samsung captured its first foothold on US soil.

Huawei would have loved to have been part of that shakeup, but as of now the big US operators have awarded their major LTE contracts, establishing a new set of incumbents for years to come.