Huawei’s revenue growth grinded to a halt in Q1 due to the Covid-19 (coronavirus) pandemic and US trade restrictions, but the embattled company is the big winner as China’s mobile operators boost capex to accelerate the rollout of 5G.
Since the start of 2020, the vendor won contracts valued at CNY28.4 billion ($4.01 billion) from China Mobile, the world’s largest operator, Bloomberg reported.
China Mobile increased capex this year 8.3 per cent to CNY180 billion, with plans to deploy 300,000 5G sites nationwide. The three major mobile operators together earmarked CNY335 billion in capex for 2020, a significant increase from the previous year.
The biggest chunk of Huawei’s win came at the end of March, when it won the majority (57.3 per cent) of the operator’s phase two 5G tender, valued at a total of CNY37.1 billion, giving the vendor a CNY21.3 billion contract to deploy some 132,000 base stations.
In addition, the vendor secured a CNY5.6 billion 5G data transmission network deal from China Mobile, taking 56 per cent of the entire contract, Bloomberg wrote. The company and ZTE also split a 5G data management contract from the operator valued at CNY1 billion.
The operator also ordered about 70,000 5G smartphones and 140,000 5G portable Wi-Fi devices from Huawei this year, Bloomberg said.
China Unicom and China Telecom are expected to announce the results of 5G tenders soon.
CEO and founder Ren Zhengfei last month insisted the outbreak hasn’t dented its efforts to develop its own technologies and reduce dependence on US imports, noting it boosted its 2020 R&D budget by $5 billion to more than $20 billion.
In early February, the company said it signed 91 commercial 5G contracts and shipped more than 600,000 5G active antenna units.
Its revenue in the first quarter of 2020 rose only 1.4 per cent year-on-year in Q1 to CNY182.2 billion, down from 39 per cent in Q1 2019.
Rival ZTE, also based in the southern city of Shenzhen, has seen its share of China Mobile network awards increase sharply as Finish-based Nokia was left off the operator’s roster for the contract covering deployment across 28 provinces.
ZTE took a 28.7 per cent share in China Mobile’s phase 2 5G deal, up from single-digit figures for two 5G core network contracts the operator awarded in June 2019. Both were estimated to be valued at $2 billion.
At the time, the operator noted it would continue to work with both domestic and international suppliers, despite sanctions imposed on Huawei by the US.
With Nokia left off its list and the two domestic players taking a larger share, increased pressure from the US looks to be taking its toll on China Mobile’s appetite for sharing its 5G spoils.