China's Huawei revenue jumps 56% amid uncertainty over global trade war

Chinese telecom gear maker trebled its net profit during 2018-19; revenue up sixfold in 5 years

A crisis that began with American investigating agencies warning against purchasing Huawei products two years ago has turned into a storm with full sanctions on the firm by the US government.

But nothing has dented its business in the world’s second-largest telecom market — India.

Amid a global trade war, which has the potential to severely threaten its future, Chinese telecom gear maker Huawei has, so far, managed to keep its business here on the upswing.

According to the data at the Registrar of Companies (RoC), revenue from its telecom gear business jumped by 56 per cent during the financial year ended March 31, 2019.

During 2018-19, the revenue of Huawei Telecommunications (India) — the group entity that manufactures and markets telecommunication equipment — grew to Rs 12,884 crore, from Rs 8,282 crore in the previous financial year.

Its net profit jumped by 213 per cent to Rs 623 crore, from Rs 199 crore in 2017-18.

The firm’s business has grown significantly in the past five years. Since 2014-15, its revenue has grown six times — from Rs 1,844 crore.

Its profit, however, dwindled during the intervening years. From Rs 430 crore in 2014-15, it fell to Rs 199 crore in 2017-18.

The RoC data shows another group firm, Huawei Technologies, which is involved in software services, posted 10.5 per cent growth in net revenue during the year — from Rs 892 crore in 2017-18 to Rs 986 crore in 2018-19.

Its net profit, though, fell year-on-year by 10 per cent to Rs 49.5 crore, from Rs 54.6 crore.

 

This performance may come as a breather for Huawei, which is betting heavily on the Indian market.

Last week, Jay Chen, its chief executive of the India unit, stressed the importance of the market here. After the US government prohibited it from doing business in one of the largest markets globally, Chen said Huawei was ready to comply with the rules and regulations set by the Government of India.

“The Indian market has an ecosystem now,” Chen said in an interview. “If this ecosystem is broken because of the absence of Huawei, the loss will not only be financial but also about losing technology development.”

Huawei’s concerns are not without reason. An estimated Rs 2.1 trillion is expected to be spent by three Indian telecom service providers and other stakeholders over the next few years.

However, after the action of the US government, the government in India has not made up its mind as to whether Huawei will be allowed to participate in the upcoming 5G telecommunication deployment in the country.

According to sources, the country’s telecom giants like Reliance Jio Infocomm and Bharti Airtel have, for now, agreed to stay away from Chinese telecom gear makers for the initial 5G trials. But Sunil Mittal, founder and chairman of Bharti Airtel, stood up for the Chinese giant recently.

In a conference, sitting beside US Secretary for Commerce Wilbur Ross, Mittal said its products were “significantly superior” to those of European companies, on which US departments were dependent.

His comments came after Ross talked of security risks involving firms such as Huawei.

“Without getting into a debate on security risks, I can say that over the past 10-12 years, Huawei has become extremely good with its products. I can safely say its products are superior to those of Ericsson and Nokia… I use products of all three of them,” he said.