Huawei's global services expand 21%

Joseph Waring
25 Apr 2014
Daily News

Huawei’s global services business was up 21% last year and now accounts for almost as much revenue as its wireless group ($8.4 billion vs $8.5 billion). The business unit is forecast to grow another 17% this year and is on track to become the largest segment within its carrier group.

The company’s carrier business, which accounts for 70% of total revenue, will fall below 60% by 2018, said rotating CEO Eric Xu. He estimates it will settle at somewhere between 50% and 60% of turnover.

This trend is clearly evident in its 2013 results, with carrier group revenue increasing just 4% to 166.5 billion yuan ($27.5 billion) in 2013 while the enterprise business expanded 32% ($2.47 billion) and the consumer unit was up almost 18% ($9.22 billion). Last year carrier revenue increased about 8%.

The consumer group accounted for 24% of total revenue and the enterprise group made up 6%.

Besides the surge in global services, which now accounts for 31% of carrier group revenue, the other growth segment was wireless networks, which was up 5.4% year-on-year in 2013.

The other two segments within the group experienced negative growth in 2013 – fixed networks revenue was down 7% to $7.3 billion and carrier software and core network business fell 10% to $2.7 billion.

Ken Wong, president of marketing and solutions for Huawei’s carrier business, attributed the declines to the cyclical nature of both fixed-line and carrier software implementations. In particular, he noted that BSS contracts take a year to design and close to three years to implement.

Wong expects both segments to rebound this year with single-digit growth. Overall, carrier revenue is forecast to increase 9% this year.

Demand for fixed gear will also increase as mobile operators look to acquire fixed network assess, he said. Examples include Vodafone buying a cable network operator and China Mobile purchasing a license for fixed-line services. He noted that LTE launches also drive demand for backhaul, core and optical equipment. “So there is synergy between fixed and wireless networks.”

Across all businesses China led revenue growth, growing 14% to $13.58 billion, compared to just 4% growth for Asia Pacific.

Related content