Chinese telecom equipment manufacturer Huawei won most of the business as the country’s mobile carriers implemented extensive 3G infrastructure development and network construction plans in 2009, according to a recent report from consulting firm Frost & Sullivan. Since 2008, the China Mobile (0941.HK, CHL.NYSE), China Unicom (0762.HK, 600050.SH, CHU.NYSE) and China Telecom (0728.HK, CHA.NYSE) have together spent US$7 billion on 3G equipment and Huawei secured contracts from all three carriers. The company generated revenues of US$21.5 billion in 2009.
While competitor ZTE’s (0763.HK) share of the China Mobile’s TD-SCDMA equipment procurement was higher, Huawei acquired a leading share in China Unicom’s WCDMA and China Telecom’s CDMA2000 network developments. With most Chinese 3G network construction completed, the new domestic focus will be on capacity expansion and equipment relocation.
Huawei’s success primes it for a continued leading role in telecommunications development in domestic markets as it expands internationally. As China’s 3G market matures, Huawei will look overseas to America and emerging markets for further expansion opportunities while preparing for the eventual Chinese 4G rollout. Huawei’s evolution threatens not only ZTE within the Chinese market, but also the international dominance of long-established telecom equipment providers like Alcatel-Lucent and Ericsson. With increasingly advanced technology, Huawei is building competitiveness that is not purely reliant on low prices.
