Xi’s visit sparks future Huawei, 4iG collabs

China’s Huawei and Hungary’s 4iG signed a letter of intent to establish a common cloud service platform for Hungarian companies and large Chinese and Asian companies with a presence in Central and Eastern Europe (CEE) during Chinese President Xi Jinping’s visit to Budapest from 8-10 May 2024. 

According to the letter, Huawei and 4iG will provide joint cloud services via a separate data centre, with a dedicated and isolated infrastructure. The agreement will not affect 4iG’s existing cloud service. The two strategic companies could also extend their cooperation to artificial intelligence research, development and application and will look into creating joint AI innovation centres in the future.

The document was signed by 4iG CEO Peter Fekete and Huawei CEO for Hungary and the Western Balkans Kao Vej-csie, with Hungarian National Economy Minister Marton Nagy present. The Hungarian stock exchange company confirmed the announcement on Friday. 

Huawei brings its capacity to provide devices, infrastructure, hybrid clouds, security and innovation, while 4iG has experience in public, hybrid and multi-cloud environments and a regional data centre. The partnership between Huawei and the 4iG group of companies can open new markets in the field of cloud-based virtual services, 4iG said in a statement. 

Kao Vej-csie said 4iG has become a regional leader in telecommunications and IT infrastructure development. Huawei’s technologies can improve the competitiveness of domestic companies, Fekete said.

Huawei, 4iG controversial but strategic for their respective governments

Both companies are in equal parts controversial and strategic for their respective governments. In November, 2023, a MOU signed by 4iG and China’s Huawei in November provoked anger from the US government, which analysts said could impact US-Hungarian diplomatic relations.

A medium-sized IT company until recent years, 4iG has become a large strategic firm. The Hungarian majority-owned company has meanwhile partnered with German defence firm Rheinmetall and bought a stake in Israeli satellite company Spacecom. It recently acquired a 45% share of space technology firm Remred.

In recent years 4iG has also expanded south, into the Balkans, with acquisitions in Albania and collaborations on a 5G network with the Montenegrin government.  In November 2023 it announced plans to remove duplications and streamline operations into three centrally managed units by 2025: telecoms trading, infrastructure and IT trading. The operator’s space and technology interests will be combined into a standalone entity.

In 2023, Hungary used Chinese loans to finalise a deal – classified as ‘of national strategic importance’ – to acquire Vodafone Europe’s Hungarian unit, which has a network partly based on Huawei technology, for HUF 660bn (EUR 1.6bn). This was the largest Hungarian state purchase since the regime change after the fall of communism, funded by loans from the Bank of China, the Industrial and Commercial Bank of China, the China Construction Bank and the Agricultural Bank of China. Hungarian Prime Minister Viktor Orban was the only EU leader to attend the third One Belt and Road Forum in Beijing in late 2023.

In February 2024, 4iG and major cable operator Telecom Egypt announced that they would jointly construct an express subsea line between Albania and Egypt. The cable will serve as a high-capacity, intercontinental connection linking Africa and Asia to Europe, via Egypt, the Mediterranean, and Albania. It will include a branch to Italy, and provide the shortest path from Albania to Frankfurt, Vienna, Budapest and Sofia. It could later be extended to Libya, Cyprus, and Greece.

The same month, the US government expressed its concerns to 4iG’s chairman and main shareholder Gellert Jaszai about Huawei, which has been restricted in some Western countries over potential espionage activities and links to the Chinese state, allegations which it denies. 

The 4iG Group now employs more than 8,000 people and is listed on the Budapest Stock Exchange. The company’s shares did not react significantly to the news on Friday morning, when its share price marginally fell by around 0.1%, to HUF 804.