The two companies are strong rivals in the global telecoms equipment market.

Washington had placed the telecoms equipment maker on a trade blacklist last year.

OVER-DEPENDENCE The report warned against over-dependence on one telecoms equipment supplier.

Huawei also denied it was selling telecoms equipment below cost to secure market share.

The telecoms equipment maker said earlier this month it would cut 800 jobs and

Huawei is the world's top producer of telecoms equipment and third-biggest maker of smartphones.

Shares in Swedish telecoms equipment maker Ericsson fell more than 10 per cent this morning.

Those who spoke against the plan argued for a blanket ban on Huawei telecoms equipment.

The winning company would then subcontract telecoms equipment makers to build and maintain the network.

Photo: AFP The Chinese company is one of the world's biggest producers of telecoms equipment.

A potential all-share deal would create a telecoms equipment giant worth roughly 40 billion euros.

The imbalance between prospective pensioners and current staff is a problem throughout the telecoms equipment industry.

The telecoms equipment market has remained sluggish after the global downturn as operators focus on costs.

French telecoms equipment maker Alcatel-Lucent reported bigger-than-expected first quarter losses as slowing economic growth hurt demand.

For other telecoms equipment makers, losses were limited.

The decision dismayed the United States, which has said Beijing could use Huawei's telecoms equipment to spy.