The current credit crunch has forced Huawei Technologies Co. Ltd. to postpone its plan to sell a stake in its mobile handset and DSL modem business.

Huawei had hoped to raise about $2 billion from the sale of a stake in its Terminals Business, which has been valued at around $3.5 billion. (See Huawei's Handset Hottie, Huawei's Plan B?, and Huawei Preps $2B Handset Handshake.)

But the Chinese vendor issued a statement late Wednesday saying: "While international investors exhibited strong interest in the business, Huawei believes that given current global market conditions and prevailing economic uncertainty the interests of the Company are best served by postponing the sale process."

The company added: "Huawei will continue to monitor market conditions and may in the future resume the stake sale process."

According to Huawei, the Terminals Business is: the No. 1 supplier of mobile broadband terminals (235 operator customers in 115 countries); the world's fourth largest CDMA handset supplier; the world's largest ADSL modem supplier; and the largest fixed wireless terminal supplier globally. (See Huawei Unveils 3G Devices.)

Huawei is believed to have been in talks with two private equity firms, Bain Capital and Silver Lake Partners , about a potential deal.

This isn't the first time Huawei has had to pull out of an M&A deal in the past year, and could put a question mark against its potential interest in Nortel Networks Ltd. 's optical and carrier Ethernet business. (See Huawei & Bain Bail on $2.2B 3Com Deal and Huawei Seen as Likely Nortel Suitor.)

— Ray Le Maistre, International News Editor, Light Reading