Bloomberg News

Huawei Hires for European Growth as Alcatel to Ericsson Cut

April 18, 2013

Huawei Hires for European Expansion as Alcatel to Ericsson Cut

Visitors inspect Huawei Technologies Co. Ascend Mate smartphones on display at the company's pavilion at the Mobile World Congress in Barcelona on Feb. 25, 2013. Huawei’s push in Europe threatens rivals on their own turf, as they struggle to cut costs and cope with falling prices. Photographer: Simon Dawson/Bloomberg

Huawei Technologies Co., China’s biggest maker of phone-network equipment, will hire 5,500 people in Europe in the next four to five years, bringing its workforce in the region to 13,000, even as competitors make reductions.

The company, based in Shenzen, predicts the need for faster telecommunications services and cheaper devices will drive demand in Europe, as the economy shows some signs of improvement, acting Chief Executive Officer and Deputy Chairman Ken Hu told reporters in Paris, speaking through a translator.

“In the past 10 years we’ve achieved a deep understanding of Europe,” Hu said. “We now have local partners, research and development facilities. We will continue to increase our investments in this market. If we can be successful in Europe and have a virtuous circle, we can invest more.”

As Huawei expands, competing vendors are reducing their workforces. Paris-based Alcatel-Lucent SA said it would cut 5,500 jobs, and Stockholm-based Ericsson AB, the world’s largest maker of mobile networks, announced it would eliminate 1,550 positions in Sweden. Nokia Siemens Networks, the venture between Nokia Oyj and Siemens AG, announced plans in 2011 to slash 17,000 jobs, or 23 percent of its headcount.

Alcatal (ALU) shares rose 0.4 percent to 1.063 euros at 9:35 a.m. in Paris, taking the advance to 6 percent this year. Ericsson climbed 0.6 percent to 77.35 kronor in Stockholm, and have jumped 19 percent in 2013.

Faster Networks

European operators for years were reluctant to spend on their networks amid falling profits and grim economic prospects. They’ve started investing again to upgrade to a new generation of faster networks. Executives from Europe’s mobile-phone operators, including France Telecom SA and Vodafone Group Plc, have said that by being able to charge a premium for quicker data services they may increase revenue from consumers.

Huawei’s push in Europe threatens rivals on their own turf, as they struggle to cut costs and cope with falling prices.

“We’re not here to replace Alcatel,” Hu said. “Huawei and Alcatel can coexist in France or elsewhere, just like they do in China.”

Huawei has predicted an increase in spending this year from carriers building faster networks using a technology called long-term evolution. Ryan Ding, head of Huawei’s carrier network business group, forecast in February that the unit’s sales will rise by 9 percent this year to about $28 billion.

U.S. Security

The Chinese company said last week it will get about 500 million euros ($651 million) in the coming five years from a contract to help build a high-speed mobile network for Italian phone company Wind Telecomunicazioni SpA. It is one of Huawei’s biggest deals so far in Europe, according to Roberto Loiola, who heads the Western Europe unit at the Chinese company.

Alcatel-Lucent has said it expects sales of network equipment to be stable in Europe this year. Huawei’s Hu declined to give a forecast.

While business for Huawei has been flowing at home from the likes of China Mobile Ltd. (941), the company is fighting concerns over cyber-security in some markets abroad, including the U.S., as American intelligence agencies and security companies traced Web attacks to China.

Hu said there is no evidence to back “rumors” about Huawei’s network equipment threatening security.

“Whatever the market, if we want to succeed, there’s our efforts, and there’s the need for the environment to be open, fair and transparent,” Hu said. “We didn’t feel abnormal limitations toward us in the European Union. We’re satisfied with the European market, that’s why we want to invest more and create more jobs.”

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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