Amid security concerns, Huawei eyes first LatAm datacenter

Huawei is looking at Chile, Argentina and Brazil to install its first Latin America datacenter in order to compete with the likes of Google by expanding cloud and enterprise services.

The news comes amid increasing security concerns around the Chinese tech giant that have spread from the US to Europe and beyond.

A source at Huawei Chile confirmed to BNamericas that the company's local office is lobbying headquarters in Shenzhen to invest in Chile due to its economic and political stability, as well as the country's plans to build a US$600mn trans-Pacific fiber optic cable connecting Latin America with Asia. Huawei carried out the pre-feasibility study for that project and is also building a US$100mn 3,000km submarine cable connecting Chile's deep south, which is due to be completed mid-year.

Nevertheless, Huawei's offices in Brazil and Argentina are also making their case, and a decision is expected in the second quarter.

Pamela Gidi, head of Chile's telecoms regulator Subtel, is due to meet with Huawei executives in China to discuss the matter as part of an Asian roadshow that will also take her to Japan and South Korea in March to promote Chile's telecoms infrastructure drive.

Korea Telcom, Japan's NEC and China Telecom have all publically expressed interest in investing in Chilean telecoms infrastructure.

Meanwhile, Amazon Web Services has been sending ambiguous signals for over a year about its intentions to install a datacenter in either Chile or Argentina. Chinese e-commerce giant Alibaba has also approached the Chilean government about potentially setting up a datacenter in the country, Gidi confirmed to BNamericas.

"Chile has to meet certain conditions to attract such investment: legal, political, economic and regulatory certainty," she said.

"But it also has to have fiber infrastructure to enable these companies to transport that data to other countries or even other continents. That is why we are looking at the trans-Pacific cable and boosting fiber deployments with Peru, Argentina and Brazil, that is all part of the same plan to make Chile attractive to these companies."

DATACENTER

In offering cloud services in Chile, Huawei would compete with the likes of Google, CenturyLink, Sonda and local telcos Gtd and Entel.

The source said that if installed in Chile, the company would initially focus on the local market before expanding the offering to other markets in the region.

SECURITY CONCERNS

US officials have been pressuring their European counterparts to ban the Chinese telco from supplying wireless infrastructure due to national security concerns, given the company's historic ties with the Chinese state.

US Secretary of State Mike Pompeo has warned that the US will not partner with or share information with countries that adopt Huawei technology. The Donald Trump administration has argued that Huawei products have built-in backdoors that could facilitate Chinese spying. Australia has followed suit and banned Huawei, along with ZTE, from providing equipment for its 5G network. The European Commission is also considering a de facto ban on Huawei 5G network equipment.

Gidi said that the Chilean government has yet to make a decision about where it stands regarding Huawei.

"Some countries have said they are going to block Huawei, others in Europe and England have said there is no problem. We are observing the situation and the whole telecoms ecosystem, not only Huawei but Nokia and Ericsson," she said.

"For now it is business as usual. We are not taking any special considerations on Huawei. We continue to be infrastructure partners in this country. Chile is an open market."