Huawei to flog budget smartphone business for $15bn - reports

Chinese manufacturer to offload Honor brand to combination of Shenzen government and distributor Digital China, Reuters says

Huawei is reportedly selling off its budget smartphone brand Honor to a consortium that includes the Chinese government, according to Reuters.

The deal is reported to be valued at 100bn yuan (£11.9bn) and the consortium is led by handset distributor Digital China and the local government of its hometown of Shenzen, the publication reported, citing people familiar with the matter.

The all cash sale will include almost all assets including brand, R&D capabilities and supply chain management and is expected to be announced on Sunday, the sources said.

Huawei established Honor in 2013 but the unit mostly operates independently and divestment would mean Honor would no longer be subject to Huawei's US sanctions, according to Reuters.

The purported sale comes as US restrictions on supplying Huawei forces the manufacturer to focus on high-end handsets and corporate business, the sources added.

The Chinese vendor has long been the subject of national security concerns by the US government, which has placed numerous sanctions on it, including a move last year to prevent most US companies from doing business with Huawei.

Digital China is a main distributor of Honor and the deal would see it take a 15 per cent stake in the business. It will be joined in the consortium by at least three investment firms backed by the government of Shenzen, with each firm taking a 10 to 15 per cent stake, the sources said.

Most o Honor's management team and 7,000-strong workforce are expected to remain with the business after the sale. It is expected that the company will go public within three years, the sources added.