Huawei set to invest £1.2b in UK telecoms market

PUBLISHED : Wednesday, 12 September, 2012, 12:00am
UPDATED : Wednesday, 12 September, 2012, 2:01am

Huawei Technologies, the world's second-largest supplier of telecommunications equipment, announced yesterday a £1.2 billion (HK$14.9 billion) investment in Britain.

Based in Shenzhen, the privately held company is second only to Sweden's Ericsson as a supplier of network equipment. Huawei was founded in 1987 by chief executive Ren Zhengfei, a former People's Liberation Army soldier. Huawei now sells telecommunications terminals, including smartphones, in Britain and handsets, terminals and other equipment in the rest of Europe, Lisa Soh, an analyst at Macquarie Capital Securities, said.

The investment in Britain aims to create at least 700 jobs over the next five years while directly investing £600 million, and a further £600 million in investment would be generated through procurement, Reuters reported. Huawei and other mainland telecommunications equipment makers, including ZTE, have experienced a bumpy ride in their efforts to expand overseas.

Due to concerns about security, the United States government has put a dampener on Huawei's efforts over the past decade to expand its network infrastructure business in that country.

Huawei's US revenue reached US$1.3 billion last year, up from US$765 million in 2010. Most of that came from sales of 3G smartphones and regular 2G handsets to network operators.

The company was barred from bidding for an Australian broadband project in December.

Yang Changlong, an industry analyst at Beijing's Bayes Consulting, said: "It is difficult for Chinese companies to get into the Western market because these countries distrust China."

Among efforts to subdue concerns over Ren's background with the Chinese military, from which he was made redundant three decades ago, Huawei started rotating its chief executives last year. The company recently pledged never to co-operate in espionage.