Huawei has no plans for listing

0 Comment(s)Print E-mail China Daily, April 24, 2013
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Chinese telecom giant Huawei Technologies Co Ltd said it has no intention of being listed in the near future, which indicates that the company is unlikely to make large mergers and acquisitions due to financial pressure, according to company executives.

Eric Xu, executive vice-president of Huawei and one of its rotating CEOs, said that Huawei, the world's second-largest telecom equipment maker, has grown organically over the past 25 years.

"And looking into the future, we will continue to rely mainly on organic growth," Xu said.

Huawei is not a listed company and it does not intend to become one. Therefore, it does not have enough cash to purchase large companies, Xu added.

He made the remarks during the 2013 Huawei Global Analyst Summit, which was held in Shenzhen on Tuesday.

"However, we do not rule out the possibility of buying smaller companies for technologies, or for markets, which will help improve our competitiveness," Xu added.

Shenzhen-based Huawei posted an eye-catching results last year by achieving a 32 percent jump in net profit to 15.38 billion yuan ($2.48 billion). Its cross-town rival ZTE Corp, in contrast, booked a net loss of 2.84 billion yuan last year, from a net profit of 2.06 billion yuan in 2011.

Other global major telecom gear vendors, including Sweden-based Ericsson, also failed to gain significant profit growth in 2012. Slower network infrastructure spending by worldwide telecom operators was regarded as one of the main reasons for the flat telecom gear business growth in the period.

Xu said he is neither optimistic nor pessimistic about the carrier networking business this year.

"It is hard to say if the worst time for European telecom operators has passed. I expect a similar industry growth rate worldwide this year as to that in 2012," he said.

Global spending on carrier infrastructure slipped 6.6 percent to $77.3 billion in 2012, and is expected to grow only 3.4 percent in 2013, according to Gartner Research.

The domestic market is still going to be one of the highlights for Huawei's business this year, Xu said, thanks to the explosive growth of data traffic in operators' networks.

Chinese government officials have sent clear signals that they will support fourth-generation mobile network construction in the country.

China Mobile Ltd, the nation's largest telecom operator, announced its capital spending will jump 49 percent year-on-year to 190.2 billion yuan in 2013. More than half of the company's spending on networks - 42 billion yuan - will go on 4G projects this year.

"4G projects in China are unlikely to create a significant boost for Huawei's revenue this year," Xu said. He said that if all the imminent 4G project investment is added up, it is still a small sum compared with Huawei's annual sales.

Xu said Huawei currently does not target the United States as a key market.

Both Huawei and ZTE were banned from making acquisitions and supplying equipment to network operators in the US due to some "potential national security concerns".

"We are not particularly interested in the US market," Xu said. He did not provide more details. Huawei previously denied it posed any threat to the US.

Huawei generates revenue mainly from three business groups. Its flagship carrier business sells equipment to telecom operators, while its consumer group sells handsets and tablets to end-users. The enterprise unit, which had the highest growth rate, conducts business with corporations.

The three business groups are closely tied, Xu said. In the smartphone business, for example, all consumers can create and consume information through the devices, which will translate into higher data traffic flow over operators' networks. It drives carriers to continually expand capacity. "Therefore, it serves the fundamental interests of our carrier business," he said.

Xu added that he expects Huawei's networking equipment sales targeted at enterprises to rise to $10 billion by 2017.

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