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Huawei

Huawei eyes US$100 billion revenue this year despite slow growth in key carrier business

PUBLISHED : Friday, 30 March, 2018, 12:03pm
UPDATED : Friday, 30 March, 2018, 11:18pm

Huawei Technologies, the world’s largest telecommunications equipment provider, is eyeing revenue exceeding US$100 billion in 2018 on expectations of wider deployment of emerging technologies such as 5G and Internet of Things (IoT) despite slower growth in its key carrier business.

Group revenue reached 603.6 billion yuan, or US$92.5 billion based on year-end exchange rates, an increase of 15.7 per cent over 2016, the Shenzhen-based company said in a statement on Friday.

Group revenue growth was nevertheless slower than the 32 per cent year on year registered in 2016.

“Emerging technologies like the Internet of Things, cloud computing, artificial intelligence and 5G will soon see large-scale application,” Ken Hu Houkun, Huawei’s rotating chairman, said in the statement.

“Ultimately, we aim to bring digital to every person, home and organisation for a fully connected, intelligent world.”

Huawei, also China’s largest smartphone maker, is expected to soon join the US$100 billion club along with a number of other international technologies companies such as Alphabet, the parent company of Google, which reported last month that it topped US$100 billion in annual sales for the first time in Google’s 20-year history.

However, Huawei’s global ambitions took a hit earlier this year when a deal with US carrier AT&T fell through due to pressure from the US government over national security concerns.

Speaking at the results press conference on Friday, Hu said: “These difficulties in the US market will make us work harder to seek growth from other parts of the world. We will...invest more in innovation and have more cooperation with other business partners globally.

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The privately-owned company, which uses global accounting firm KPMG to audit its financial statements, said net profit in 2017 grew 28.1 per cent year on year to 47.5 billion yuan, adding that its annual investment in research and development reached 89.7 billion yuan, up 17.4 per cent over 2016.

However, Huawei’s key carrier business – providing products and services to telecoms network operators – registered a tepid 2.5 per cent growth in revenue to 297.8 billion yuan, compared with the 24 per cent growth in the previous year.

The consumer business segment, which primarily involves Huawei smartphones and its sub-brand Honor, became the new growth engine for the company, selling a total of 153 million smartphones and generating total sales of 237.2 billion yuan, up 31.9 per cent.

The smaller enterprise business unit that focuses on innovations such as cloud, big data, campus networks, data centres and IoT, generated 54.9 billion yuan in annual revenue, an increase of 35.1 per cent.

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5G is Huawei’s key focus to generate future growth but it is also facing fierce competition from other equipment vendors such as ZTE Corp, which has cornered the first 5G standard in China with other business partners, said Zhao Ziming, senior analyst at Beijing-based consultancy Cyzone.

ZTE, China’s largest-listed telecommunications equipment manufacturer, reported a net profit of 4.6 billion yuan (US$728 million) last year, rebounding from a 2.4 billion yuan loss in 2016, on the back of healthy revenue growth at its carrier networks and consumer businesses.

Ericsson and IHS Markit have estimated that 1 billion people globally are likely to use 5G mobile services within five years, leading to US$12.3 trillion in worldwide economic output by the mid-2030s, while Strategy Analytics forecasts global 5G smartphone shipments to reach 1.5 billion units in 2025.

Huawei shipped 90.9 million handsets in mainland China last year, accounting for just over one fifth of the market. Globally, it ranked No 3 with a 10.4 per cent market share behind Samsung Electronics and Apple, according to IDC.