Huawei Denies Selloff Plan
The company had initially declined to comment on an article that first appeared in the Financial Times earlier this week, but the rumor has gathered momentum, and even cropped up in the Q&A session of Alcatel's (NYSE: ALA; Paris: CGEP.PA) earnings conference call Thursday.
Now Huawei is categorically denying any such plans exist. "We would like to clarify that Huawei has no intention of selling off any part of its business," says the company in an email.
"By the end of 2004, Huawei had completed a restructuring to converge the business units of NGN, optical network, access network, datacom, and switches under the Network Product Line to provide customers with an innovative, total end-to-end solution, which includes the optical and access divisions. The restructuring demonstrates Huawei's business and development strategies, and validates the speculation as having no basis."
The company revealed its restructuring last August, referring to its "Network Product Line" as "Technology," as it paved its way towards a listing on an overseas stock exchange (see Is Huawei Edging Closer to IPO?).
Selling the access business would make little sense for a company that has ambitious growth plans and international aspirations (see Give Them Credit: Huawei's Growing and Huawei Set for $5B in 2004). Broadband access is the hottest market in the global telecom sector, and Huawei, which offers its products at lower per-line prices than rivals such as Alcatel and Lucent Technologies Inc. (NYSE: LU), has already had significant success with its DSLAMs (see China Telecom Picks Huawei for ADSL Again and Huawei Wins China Netcom Order) .
In addition to that domestic success, Huawei's access equipment is bringing it success in one of its key target markets, Europe, where its DSLAMs are in use at Cesky Telecom a.s. and French triple-play service provider Neuf Telecom, which also uses Huawei's optical gear (see Cesky Telecom Picks Huawei , and Neuf: Time Is Right for IPTV).
Huawei is also one of four companies on BT Group plc's (NYSE: BT; London: BTA) 21st Century Network access infrastructure shortlist (see BT Has 21CN Shortlists). And the vendor has had a recent and significant breakthrough into Europe's 3G wireless market (see Huawei Wins in West).
Huawei has had success with its optical equipment, and is ranked in the top four suppliers by revenues in the world by Infonetics Research Inc. (see Infonetics Reports on Optical Gear).
Huawei, which has retained a slot in Light Reading's Top Ten Private Companies, recently announced 2004 sales of $5.58 billion, and has said that figure could increase to $7.5 billion in 2005, including $4 billion in international sales (see Huawei's Global Sales Hit $5.58B).
Huawei still has not revealed any sort of timetable for its international IPO, but must have been encouraged by the level of investor demand for a new stock issue on the Hong Kong exchange by fellow Chinese vendor ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763). (See ZTE Zooms on HK Debut.)
— Ray Le Maistre, International News Editor, Light Reading