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Alibaba said in talks to buy ZTE's software arm for cloud unit

(Bloomberg) -- Alibaba Group Holding Ltd. is closing in on a deal to acquire Chinese telecommunications gear maker ZTE Corp.’s software subsidiary, an acquisition that could help strengthen its global internet computing business, people familiar with the deal said.

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ZTE Corp. signage is displayed near an employee at the company's headquarters in the Nanshan district of Shenzhen, China. Photographer: Brent Lewin/Bloomberg

China’s leading e-commerce operator has been in negotiations to buy ZTEsoft Technology Co. for months and is nearing an agreement, according to one of the people, who asked not to be identified discussing a private deal. Alibaba could pay between 2 billion yuan ($294 million) and 3 billion yuan for a division that provides software support and services to carriers around the world, another person said.

Alibaba, which grew to become one of China’s two biggest corporations alongside a boom in online shopping, is investing billions in expanding a cloud computing business that competes with Amazon.com Inc. and Microsoft Corp. That effort would benefit from ZTEsoft’s global client portfolio and relationships with wireless carriers from Europe and Africa.

A sale will also help replenish ZTE’s coffers, depleted by a record $1.2 billion fine levied this year by the U.S. government for violating sanctions on technology exports. The company is vying with larger rival Huawei Technologies Co. for contracts to build fifth-generation networks in China and around the world, an effort that will soak up billions for research and development alone.

Alibaba and ZTE declined to comment. ZTE’s Nanjing-based subsidiary, which provides business and operations support to clients including Orange SA and KPN, has said its software has been deployed in more than 70 countries.

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