Telecommunication providers in the Middle East are the subject of new cyber attacks that commenced in the first quarter of 2023.

The intrusion set has been attributed to a Chinese cyber espionage actor associated with a long-running campaign dubbed Operation Soft Cell based on tooling overlaps.

"The initial attack phase involves infiltrating Internet-facing Microsoft Exchange servers to deploy web shells used for command execution," researchers from SentinelOne and QGroup said in a new technical report shared with The Hacker News.

"Once a foothold is established, the attackers conduct a variety of reconnaissance, credential theft, lateral movement, and data exfiltration activities."

Operation Soft Cell, according to Cybereason, refers to malicious activities undertaken by China-affiliated actors targeting telecommunications providers since at least 2012.

The Soft Cell threat actor, also tracked by Microsoft as Gallium, is known to target unpatched internet-facing services and use tools like Mimikatz to obtain credentials that allows for lateral movement across the targeted networks.

Also put to use by the adversarial collective is a "difficult-to-detect" backdoor codenamed PingPull in its espionage attacks directed against companies operating in Southeast Asia, Europe, Africa, and the Middle East.

Central to the latest campaign is the deployment of a custom variant of Mimikatz referred to as mim221, which packs in new anti-detection features.

"The use of special-purpose modules that implement a range of advanced techniques shows the threat actors' dedication to advancing its toolset towards maximum stealth," the researchers said, adding it "highlights the continuous maintenance and further development of the Chinese espionage malware arsenal."

Prior research into Gallium suggests tactical similarities [PDF] with multiple Chinese nation-state groups such as APT10 (aka Bronze Riverside, Potassium, or Stone Panda), APT27 (aka Bronze Union, Emissary Panda, or Lucky Mouse), and APT41 (aka Barium, Bronze Atlas, or Wicked Panda).

This once again points to signs of closed-source tool-sharing between Chinese state-sponsored threat actors, not to mention the possibility of a "digital quartermaster" responsible for maintaining and distributing the toolset.

The findings come amid revelations that various other hacking groups, including BackdoorDiplomacy and WIP26, have set their sights on telecom service providers in the Middle East region.

"Chinese cyber espionage threat actors are known to have a strategic interest in the Middle East," the researchers concluded.

"These threat actors will almost certainly continue exploring and upgrading their tools with new techniques for evading detection, including integrating and modifying publicly available code."