Light Reading
Hong Kong operator tells Chinese vendors to play nice.

PCCW Reads Riot Act to Huawei, ZTE

Robert Clark
News Analysis
Robert Clark
6/26/2014
50%
50%

Hong Kong telecom, IT, and media giant PCCW has read the riot act to staff at Huawei and ZTE as the process of merging PCCW's telecom network with that of former rival CSL gets underway.

PCCW Ltd. (NYSE: PCW; Hong Kong: 0008), which owns a majority stake in HKT Ltd. , won approval for the acquisition of Hong Kong CSL Ltd. from Telstra Corp. Ltd. (ASX: TLS; NZK: TLS) in May, after agreeing to surrender 29.6MHz of 2100MHz 3G spectrum and promising not to take part in any UMTS spectrum auction for the next five years. (See CSL Sale Sparks Hong Kong Speculation.)

People close to the situation say the integration of the HKT and CSL networks is relatively straightforward, but they are concerned about how well the two Chinese vendors can work together.

Huawei Technologies Co. Ltd. supplies the PCCW-HKT core and radio networks, while ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) is the sole supplier for CSL. "We called Huawei and ZTE together and told them they had to cooperate," one source said. "We won't tolerate any funny stuff."

The Shenzhen-based rivals have sometimes been joint suppliers, but they have never before been asked to collaborate on a project as delicate as this, where each will have to agree to rip out some of its own gear in favor of the other.

PCCW, which is expecting to shave a fifth of its network costs through the integration, is considering a geographic split between the two vendors.

The M&A deal brings CSL back into the fold of Hong Kong's biggest telco. It was one of a number of assets spun off by PCCW major shareholder Richard Li after his acquisition of the former Hongkong Telecom from Cable & Wireless.

PCCW acquired its way back into the mobile business with the purchase of small cellco Sunday in 2006. At that time, Huawei was an 8% shareholder and major supplier to Sunday. The operator bought out Huawei's stake and paid off the vendor loan to Sunday.

ZTE supplanted NSN (now Nokia Networks) as CSL's prime supplier for 3.5G and 4G, and helped CSL launch one of the world's first 4G networks in 2011. (See 1O1O Launches First 4G LTE D-C Mobile Network.)

The acquisition also adds CSL's two well-known mobile brands -- 1O1O and one2free -- to the PCCW product set. A spokesperson said the company would continue with the brands but would make further announcements at a later date.

— Robert Clark, contributing editor, special to Light Reading

(5)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
nasimson
50%
50%
nasimson,
User Rank: Light Sabre
6/30/2014 | 11:03:41 AM
RE: Could have seen that one coming
@EE: Why do you say that Splitting the network geographically is tough call? To me it seems simpler and more straightforward than any other method of splitting the network. This blog deserves a followup blog. It will be interesting to see how PCCW handled ZTE and Huawei.
SachinEE
50%
50%
SachinEE,
User Rank: Light Sabre
6/28/2014 | 5:25:33 AM
RE: Could have seen that one coming
Splitting the network geographically is tough call for PCCW. However, as it seems, they have no other option because their major goal is to satisfy their suppliers. As it is, Huawei supplies PCCW-HKT core and radio networks and on the other hand ZTE is the sole supplier for CSL. Huawei and ZTE for sure must be going through a tough time. Who on earth would find it easy to rip out some of their own share in favor of their rival? Of course no one, but do they have an option?
nasimson
50%
50%
nasimson,
User Rank: Light Sabre
6/28/2014 | 1:06:39 AM
Re: Could have seen that one coming
As the two rivals gain more and more market share on the expense of Alcatel, NSN, situations like this would not come rarely. Both companies need to exhibit some maturity. This will be a good test case of the maturity at each side.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
6/26/2014 | 11:32:51 AM
Re: Could have seen that one coming
This sounds like vendor lock-in, writ very large. Splitting the network geographically to keep suppliers happy?
pdonegan67
50%
50%
pdonegan67,
User Rank: Light Sabre
6/26/2014 | 7:54:49 AM
Could have seen that one coming
Forget Cisco vs Juniper, Apple vs Google, Nokia vs Ericsson. The rivalry between ZTE and Huawei is about as ferocious and uncompromising as it gets. Think no holds barred, and then some.

You really don't want to be the account guy in one of those companies that loses out to the other vendor. On the other hand, if an opportunity arises to land the other lot in it with the customer you absolutely want to be that guy.

Good luck with that, PCCW.
Educational Resources
sponsor supplied content
Educational Resources Archive
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Interviews
CenturyLink: Building the Case for NFV

12|19|14   |   02:14   |   (0) comments


At the 2020 Vision Executive Summit, James Feger, VP, Network Strategy & Development at CenturyLink, talks about how the US operator is approaching virtual network functions from an operational and business case perspective.
LRTV Interviews
Liberty Global Sees Business Goldmine

12|18|14   |     |   (0) comments


Steen Sorensen, VP of business services for Liberty Global, explains where the giant international MSO sees growth potential.
LRTV Documentaries
EE: The Road to 5G

12|16|14   |   16:02   |   (1) comment


Andy Sutton, the principal network architect at UK mobile operator EE, explains how his company is using Wembley stadium as a wireless test bed and how that's helping EE to plan the evolution to 5G.
LRTV Huawei Video Resource Center
Highlights of Huawei's NFV Open Cloud Forum 2014

12|16|14   |     |   (0) comments


Huawei hosted its inaugural NFV Open Cloud Forum during the SDN & OpenFlow World Congress 2014 in Düsseldorf, Germany. The Forum brought together technology thought leaders, senior executives and telecom professionals from global carriers, industry associations, as well as other partner companies in the ecosystem, to exchange views on and collectively explore how ...
LRTV Custom TV
Realizing Operators' Digital Vision

12|16|14   |   5:23   |   (0) comments


Leveraging technology is fundamental to digital transformation but understanding customers and serving them really well is at the heart of digital businesses. TM Forum lists the following as the strategic pillars of the digital business: business agility and rapid innovation, operational agility and effectiveness, IT and data centricity, plus customer centricity. ...
LRTV Documentaries
US Cellular Injects Analytics Into LTE

12|16|14   |   2:57   |   (1) comment


US Cellular's Mario Vela explains how the operator uses analytics for network planning and what comes next as the carrier looks to eke more value out of its metrics.
LRTV Interviews
How Cox Biz Plans to Keep Growing

12|15|14   |     |   (2) comments


Steve Rowley, SVP of Cox Business, details how the third-biggest US MSO intends to boost its revenues to $2 billion and beyond over the rest of the decade
LRTV Huawei Video Resource Center
Interview With Bill Zhang, Director of SoftCOM Product Management, Huawei

12|15|14   |   2:50   |   (0) comments


Bill Zhang elaborated on Huawei's open philosophy in NFV solution development and network architecture design at the SDN & OpenFlow World Congress 2014.
LRTV Huawei Video Resource Center
Event Highlights: Huawei at SDN & OpenFlow World Congress 2014

12|15|14   |   3:43   |   (0) comments


Huawei joined the 2014 SDN & OpenFlow Congress as one of the key sponsors and contributors. At the event, Huawei reinforced the openness and flexibility of its network infrastructure strategies, and provided updates on its SDN and NVF innovations. Through participations at the exhibitions, forums and speeches, Huawei encouraged the industry to "think bigger and ...
LRTV Interviews
How Cable Biz Services Hit $10B Mark

12|12|14   |     |   (1) comment


Cable operators reached $10 billion in annual business services revenues by delving deeper into their vertical markets and expanding beyond the smallest firms.
LRTV Documentaries
Mediacom Aims to Test Connected Tractors

12|11|14   |   05:07   |   (3) comments


Cable business service provider is taking its services to the 'agribusiness' sector in partnership with farm equipment specialist John Deere and is getting involved in Gigabit Cities developments.
LRTV Interviews
TWC Business Looks Beyond $3B

12|10|14   |     |   (0) comments


TWC Business Services chief Phil Meeks explains how his unit has reached $3 billion in annual revenues and what its plans are for next year.
Upcoming Live Events
February 10, 2015, The Westin Peachtree Plaza, Atlanta, GA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Hot Topics
T-Mobile, BlackBerry Flirt With Reuniting
Sarah Reedy, Senior Editor, 12/17/2014
1-Gig: Coming to a Small Town Near You
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 12/17/2014
Comcast Launches 4K Streaming Service
Alan Breznick, Cable/Video Practice Leader, 12/18/2014
US Carriers, You're Going to Cuba!
Mitch Wagner, West Coast Bureau Chief, Light Reading, 12/18/2014
T-Mobile Lights Up 27 Wideband LTE Cities
Sarah Reedy, Senior Editor, 12/15/2014
Like Us on Facebook
Twitter Feed
Webinar Archive