Light Reading

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        ADD A COMMENT
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.
Flash Poll
From The Founder
Network architects aiming to upgrade their networks to support agile, open, virtualized services in the 21st century need to consider new criteria when choosing between technology suppliers.
Live Streaming Video
BTE 2015 Sponsor Keynote: HP
Dr. Prodip Sen, CTO, Network Functions Virtualization, HP
LRTV Custom TV
Red Hat Demo

7|2|15   |   10:53   |   (0) comments


Red Hat's Nicolas Lemieux demonstrates how Red Hat is driving innovation through open source communities.
LRTV Custom TV
Red Hat's Approach to OpenStack Adoption

7|2|15   |   5:17   |   (0) comments


Red Hat's Radhesh Balakrishnan outlines his company's open source strategy for both enterprises and telcos.
LRTV Custom TV
The New IP Goes Mobile With vEPC

7|2|15   |   1:12   |   (0) comments


Heavy Reading's Gabriel Brown discusses results of a Light Reading survey sponsored by Brocade that shows a clear commitment by mobile operators to move quickly to virtual EPC deployment.
LRTV Custom TV
Making Business Sense of SDN

7|2|15   |   1:42   |   (0) comments


Results of a Brocade-sponsored survey show that CSPs have a clear sense of SDN use cases but are wrestling with the business case. Sterling Perrin of Heavy Reading looks behind the numbers.
LRTV Custom TV
NFV Will Be Here Sooner Than You Think

7|2|15   |   2:22   |   (0) comments


Forget the usual ten-year cycle for new technologies – NFV will be a core part of CSP networks in five years, based on results of a Brocade-sponsored survey, says Heavy Reading's Caroline Chappell.
LRTV Custom TV
The New IP Gains Traction With CSPs

7|2|15   |   1:42   |   (0) comments


Roz Roseboro of Heavy Reading analyzes results of a Light Reading survey sponsored by Brocade showing that CSPs are getting serious about making the transition to the New IP era.
LRTV Custom TV
It's (Real) Time for Analytics

7|2|15   |   1:42   |   (0) comments


Heavy Reading's Jim Hodges looks at how CSPs say they plan to use analytics to deploy new services in real time as part of The New IP, based on results of a survey sponsored by Brocade.
LRTV Documentaries
IoT in Action

6|30|15   |   1:39   |   (7) comments


Two co-workers discuss the benefits of IoT technology.
LRTV Interviews
Ericsson Opens Up on OPNFV

6|30|15   |   14:16   |   (1) comment


Martin Bäckström, VP and head of industry area Datacom at Ericsson, talks to Light Reading founder and CEO Steve Saunders about the emergence of OPNFV, the importance of standards and Ericsson's OPNFV plans.
LRTV Custom TV
NetNumber Founder Discusses NFV/SDN Impact on SP Networks

6|26|15   |   4:15   |   (0) comments


NetNumber Founder Doug Ranalli examines why SPs need a new network infrastructure for service agility. While NFV and SDN are the tools, the old ways of thinking about signaling control are inhibitors. Doug provides his recommendations.
LRTV Custom TV
Orchestrating NFV vCPE Services Across Multivendor Networks

6|26|15   |   5:46   |   (0) comments


Nirav Modi provides an overview of vCPE, the fastest-growing NFV use case, showing how Cyan's Blue Planet orchestrates vCPE services across a multivendor infrastructure to rapidly deliver new managed services for business customers.
LRTV Custom TV
ZTE at LTE Summit Amsterdam 2015

6|26|15   |     |   (0) comments


As one of the leading global telecommunications providers, ZTE presented its cutting-edge technology at LTE World Summit 2015 in Amsterdam. On display at ZTE's booth were the latest R&D achievements in wireless, 5G development, HetNet, deep convergence of FDD and TDD, and RCS/IMD/iSDN/vCN.
Upcoming Live Events
September 16-17, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
October 6, 2015, The Westin Peachtree Plaza, Atlanta, GA
October 6, 2015, Westin Peachtree Plaza, Atlanta, GA
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
All Upcoming Live Events
Infographics
Hot Topics
Who's Feeding Fiber to LinkNYC Hotspots?
Mari Silbey, Senior Editor, Cable/Video, 6/29/2015
Colt to Jettison Ailing IT Business
Iain Morris, News Editor, 6/30/2015
Eurobites: Activist Investor Takes Stake in AlcaLu
Paul Rainford, Assistant Editor, Europe, 6/30/2015
What's a Gigabit Good For?
Carol Wilson, Editor-at-large, 7/1/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Casa Systems has been going from strength to strength over the last couple of years. In 2013, it became the first vendor to ship an integrated CCAP device -- the ...
Cedrik Neike, SVP of Global Service Provider, Service Delivery, at Cisco, talks to Light Reading founder and CEO Steve Saunders about solving service provider customer problems in a virtualized, DevOps world, including multivendor support and the future of network procurement.
Cats with Phones