Huawei Technologies reorganizes for IPO
By Cheng Zhiming (China Daily)
Updated: 2004-07-07 08:57

One of the country's leading telecom equipment providers is being restructured to pave the way for its listing plan.

"Restructuring is what we are undertaking right at the moment," Huawei Technologies spokesman Fu Jun said yesterday.

"We are doing the reshuffle to offer better services to our customers. Meanwhile, it will also help us to optimize our resources and enhance our competitiveness in the face of fiercer competition."

A source close to the company says it will also be split into eight companies to focus on different areas such as technologies, mobile business and investment.

"It will be the company's largest reshuffle ever," said the source, who refused to be named.

Although the restructuring may not be directly linked to Huawei's listing plan, it will accelerate its initial public offering (IPO) process, the source said.

However, Fu denied that the Huawei would be split into eight companies.

As far as the company's listing plan, Fu said Huawei was heading to the capital market. But he declined to elaborate further.

With an annual revenue of US$3 billion, Huawei is strong enough to compete with many international information technology giants such as Lucent and Cisco.

Last year, Huawei outclassed competitors at home and abroad by wrapping up a batch of contracts and agreements with overseas telecom operators.

Figures show the company registered sales of 31.7 billion yuan (US$3.8 billion) last year, up 42 per cent from 2002.

"Huawei Technologies will go public sooner or later to further expand," said Chen Jinqiao, director of the China Academy of Telecommunications Research under the Ministry of Information Industry.

"It will not only help the company raise funds but assist the company to further enhance its management."

Also, splitting up the company would help divert risks during future development.

"Personally, I believe the right timing for the IPO would be after the middle of next year," Chen said.

It is widely speculated that China Netcom, one of the country's largest fixed-line carriers, is going to start its IPO later this year or in early 2005.

"It's would be better for Netcom to not coincide its IPO with such a big telecom giant though, at a time when the world's telecom market is showing signs of recovery," Chen said.

Also, Chen said he believed the company's Huawei market performance this year would be of pivotal importance during a listing.

To maintain its leading position, Huawei has been working hard to provide leading technologies and solutions to its customers, said Sun Yafang, a Huawei board chairwoman.

"Technology innovation and service are the key driving forces for our development," Sun said.

For example, Huawei is engaged in the development and research of all third-generation-related equipment and products.

According to Sun, the company has enhanced its co-operation with US-based Qualcomm Inc to roll out more solutions and services based on code division multiple access (CDMA) networks, including CDMA 800MHZ and CDMA 450MHZ.

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