Huawei Sales Climbs 8% on Smartphones, China Network Push

Huawei Technologies Co., China’s biggest smartphone maker, said sales last year gained 8 percent as the company sold more devices and benefited from the nation’s push to faster wireless equipment.

Sales increased to between 238 billion yuan ($39.4 billion) and 240 billion yuan, the Shenzhen-based company said in an e-mailed statement without giving last year’s figure. Operating profit is expected to range between 28.6 billion yuan and 29.4 billion yuan, according to the statement.

Huawei, China’s largest maker of equipment for phone networks, is benefiting from the nation’s accelerating shift to fourth-generation wireless service. Regulators last month gave licenses for commercial 4G service to the nation’s three state-owned carriers, including China Mobile Ltd. (941), the world’s largest phone company by users.

“Our carrier network equipment business hasn’t reached a ceiling at all,” Chief Financial Officer Cathy Meng said today at a briefing in Beijing. “No matter whether in China or overseas, the outlook for 4G deployment remains good.”

China Mobile had started rolling out a nationwide trial network last year, which the carrier said in March would boost 2013 capital spending to 190.2 billion yuan.

Meng said sales will grow about 10 percent annually including this year. The company plans to spend about $600 million on 5G research by 2018, according to Meng.

Smartphone Vendor

Huawei has deployed 110 of the world’s 244 4G LTE networks, according to the CFO.

Huawei said in January last year that sales may rise 10 percent to 12 percent. The company makes forecasts on a U.S. dollar basis, and, in that currency, sales were up 12 percent last year, meeting the target, Meng said.

Huawei was the world’s No. 3 smartphone vendor in the quarter ended September with 4.8 percent of shipments, trailing Samsung Electronics Co. and Apple Inc., market researcher IDC said in October.

The company has diversified by expanding revenue from handsets as sales of its traditional network equipment encountered opposition in markets including the U.S. and Australia, where politicians claim equipment from the Chinese vendor may pose a security threat.

Meng’s father, Ren Zhengfei, set up Huawei in 1987 after retiring from the Chinese military in 1983. His background has been cited as a cause for concern by U.S. lawmakers.

A U.S. congressional committee in 2012 said Huawei and crosstown competitor ZTE Corp. (763) provide opportunities for Chinese intelligence services to tamper with telecommunications networks for spying, a claim both companies have denied.

“Huawei equipment complies with industry standards and there have been no security issues related to Huawei equipment,” Meng said. “For the past 20 years under stringent tests by our customers, there have been no incidents reported.”

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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