Storyline - Huawei 2010 2003 version - 518

•Performancereview•Opportunities•ConcernsBDA’stop5predictionsforHuawei’snextfiveyears•Global#2andtheretostay–Huaweiwillremaintheworld’s#2telecomequipmentvendor,unabletosurpassEricssonbutstayingaheadofNSN•Europeanstrength,NorthAmericanchallenges–HuaweiwillbecomeoneofthetopthreesuppliersinEurope,followingsuccessinemergingmarkets,butwillfacemajorchallengesincompetingwithEricsson,MotorolaandNokiaSiemensNetworksinNorthAmerica•Leaderinglobalwireline,#2inwireless–Huaweiwillbecometheleaderofthewire-lineequipmentmarket,displacingALU,andapowerfulcompetitortoEricssoninthewirelesssector•Laggardinprofessionalservices–HuaweiwillremainafollowerinprofessionalservicesbehindEricsson,NSNandALU•Marginswillnormalize–Huawei’smarginwillimproveasitleveragesproductqualityratherthanpricing.–ZTEwillcontinueitslowpricestrategy,butthiswillbeineffectiveincompetingwithHuaweiindevelopedmarkets2PerformanceReview•Overallperformance•Reasonsforthefastgrowth–Regionaldrivers:keygrowthareas;•Revenuefromdifferentregions;•Capexindifferentregions;•Marketshareinmostimportantmarket;–Product-linedrivers:Capexinglobalcontext;•Wirelessmarketshare;•Fixedlinemarketshare;–DriversinChinamarket:•TotalCapexandmarketshareinChinamarket;•3GCapexgrowthandmarketshareforHuaweiandZTE;ZWR41Huaweiaccomplishedtheworld#2insalesoftelecomequipmenttotelcos,passingNSNandAlcatelLucentin2009-XXX6811131818293142594TelecomEquipmentSalesOthersMajorVendors’RevenueandRankingsin20091USDBillion•Huaweiranked2ndaccordingtotelecomequipmentsalesand4thinoverallsales,followingCisco,EricssonandMotorola.•21%oftheYoYgrowthrate,slightlowerthanthatofthe2008,wasthehighestamongtelecom.•HuaweiandZTEarethemerelytwovendorsgainedgrowthin2009,fortheemergenceofthefinancialcrisisimpact.•Huawei’sgrowthcamemainlyfromtheChinamarket,itgainedmorethan30%ofthemarketshareinChina3Gconstruction.•Wirelessequipmentandespeciallythe3GequipmentsalewasthekeydriverofHuawei’sfastgrowthin2009.Source:CompanyInformation,BDAHuawei’sGrowth-1%21%-18%-17%-22%-21%16%TotalSalesYoYGrowth312345675Note:1.Revenuesarecalculatedaccordingtoeachcompany’sfiscalyear;2.Othersmainlyincludesterminals,equipmentssalestoenterprise;3.Standsfortheorganicgrowth;2Overallperformance2Huawei’sfastgrowthin2009camemajorfromChinamarket,forthehuge3Ginvestment;Huaweiturneddownitsgrowthtargetin2010,seekinggrowthmainlyfromoverseamarket72009ContractSalesBreakdownbyRegionUSDbillion%ofContractOrdersYoYGrowth12.3%32%19.8%35%33.3%58%34.5%9%•HuaweigainedfastgrowthinChinamarket,duetotherolloutof3GnetworkinChina.ThefastincreasinginvestmentanddominantmarketsharecontributedtoitsfastgrowthinChina.•HuaweisufferedfromflatgrowthinEMEA,duetothecapexdeclineinthemarket.HuaweiincreaseditsmarketshareinEMEAin2009,especiallyinEuropeanmarket.Huaweihasalreadybecametop3G/4GvendorinEurope,whilekeepingtheleadingpositioninAfricaandMiddleEast.•HuaweialsogainedpleasinggrowthinAsiaPacificandAmericamarketsevenwhencarrierinthesemarketsdeclinedtheirinvestmentin2009,duetoimpactfromfinancialcrisis.2009Review2010Outlook•Huaweiloweddownitsfullyeartargetin2010to20%comparedwithitsgainedgrowthof29%in2009,duetotheexpectedcapexdecliningtrendinthisyear.•HuaweiwillseedecelerationinChinaandAsiaPacificmarketduetotheshrinkofinvestment.However,thereboundoftheinvestmentvolumeinrestofthewordwillhelpHuaweitoaccomplishitstarget.Source:Huawei,BDANote:yearoveryeargrowthrateisbasedonCNY,rulingoutcurrencyexchangerateimpact.3DoneHuaweiisclosinginonEricssonandNSNinAPAC,andhasnarrowedthegapinEMEAandLATAM-XXX•APAC:Huawei’ssalesincreasedby55%YoYin2008,thankstoexpansioninSouthEastAsia.Huaweiwoncontractsfromlocaltieroneoperators,suchasStarHub,Reliance,andTelkomsel.In2008HuaweinarrowedtheleadheldbyEricssonandNSN,withthegapinsalesonlyUSD1billion,comparedwithUSD5billionin2007.•EMEA:HuaweigainedshareatEricsson’sexpense,thankstomorecontractsfromtier1carriers.AsinvestmentinWCDMAincreasedandinGSMdeclined,HuaweiachievedbettersalesthankstoitsfavorablepositioninWCDMA.•LATAM:Huaweidoubleditssales,thankstoheavy3Ginvestmentsintheregion.Manycarriersonthecontinentlaunched3Gservicesin2008.Ericssonalsobenefitedfromthisheavy3Ginvestment.RegionalTelecomInfrastructureSalesofSelectedVendorsRegionalMarketComparisonSource:CompanyInformation,BDAUSDBillion1613101156112007200898774733200720082322211120072008231120072008EMEANALATAMAPACAbbreviations:NA:NorthAmericaLATAM:LatinAmericaEMEA:Europe,MiddleEast&AfricaAPAC:AsiaPacific84Telecommarketshare-XXX9Source:CreditSwiss5Appendix-21011%4%4%5%9%15%1%6%8%OverallWirelessWire-line200620072008APACEMEANALATAMAPACEMEANALATAMGlobalCapexdowntrend-XXX•Capexgrowthwasconcentratedinemergingmarketsin2008,suchasAfrica,LATAM,andAPAC.•ChinaandLATAMrolledout3Gnetworkslastyear.CapexBreakdownbyRegionin2008:EmergingMarketsGrowing,DevelopedMarketsFallingSource:MorganStanley,BDA41%29%22%8%CAPEXGrowthin2008+16.2%+9.0%-3.8%+10.7%YoYCapexGrowthbySectorin2008:WirelessIncreasing,Wire-lineFlat11•Globalcapexgrowthwasmainlyinthewirelesssector,whilethewire-linesegmentremainedflat.-Thankstoboomingwirelessdatatraffic,carriersexpande