T-Mobile US Sued By Huawei Technologies Over 4G Patents

Chinese telecommunication equipment company Huawei Technologies Co. has filed a lawsuit against T-Mobile US Inc. (NYSE:T) over the latter’s use of Huawei’s intellectual property covering 4G technology without license. The lawsuit was filed with the District Court for the Eastern District of Texas. We remind investors that in 2014, T-Mobile US had sued Huawei over the latter’s use of phone testing robot technology.

Huawei said that it had offered T-Mobile to license its patents in 2014, but the two parties had a disagreement over the fair valuation of the same. Note that Huawei has recently been focused on aggressive international expansion by accumulating patents and the company was the largest filer of patents last year under the Patent Cooperation Treaty. Interestingly, the company is not looking for a monetary settlement. Instead, the company simply wants the court to declare that it has met the fair, reasonable and non-discriminatory (FRAND) terms so that it can force T-Mobile into resuming licensing negotiations.

Our Take

T-MobileUShas been investing a lot of money in upgrading and expanding its 4G network. According to PCMag’s 2016 Fastest Mobile Networks test, it has become one of the fastest telecom service provider in the majority of the U.S. cities covered by the survey. The company is now looking to challenge bigger rivals like Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) . In its endeavors, the company has already surpassed Sprint Corp. (NYSE:S) to become the third-largest wireless company in terms of subscriber count.

While T-Mobile US’s previous lawsuit against Huawei is still in process, Huawei may have gained a bargaining advantage through its counter lawsuit, which could result in an early settlement of the disputes.

T-Mobile currently carries a Zacks Rank #3 (Hold).