Huawei’s revenue and profits in the UK shrink after the 5G ban

After the Chinese company revealed the shrinking revenue and profits of its British division, the imminent financial impact of the British government’s ban on the use of Huawei equipment in 5G networks has been exposed.

Last summer, British Telecom was told that they would Prohibited to buy The Chinese company’s 5G equipment will start in January 2021, and any equipment they have installed must be dismantled by 2027.

This gave companies including Vodafone and British Telecom the opportunity to stock up on replacement equipment last year, while also preparing for the post-Huawei market in 2021 by signing supply contracts with Ericsson, Nokia or smaller manufacturers. fill vacancy The market left by the ban of the world’s largest telecommunications equipment company.

Huawei Technologies, the UK operating arm, said its revenue in 2020 fell 27% to 913 million pounds, while pre-interest and tax operating profit fell by a quarter to 36.4 million pounds. Due to reduced staff and travel costs, expenses during the period were reduced by 26 million pounds, which benefited the profit figures.

It paid 90 million pounds in dividends to the parent company, up from 55 million pounds in 2019.

The UK business is a relatively small part of the broader Huawei business, which reports that revenue in 2020 will increase to US$137 billion (£97 billion) and annual operating profit will fall to US$11 billion (£7.8 billion). .

Nevertheless, after the British government initially decided to allow limited use of Huawei’s 5G equipment, British companies made an amazing U-turn last year and became a symbol of Huawei’s suffering.

For a long time, the United Kingdom has been the Chinese company’s gateway to the world. Huawei even funded a test center operated by the British security department to assure the government and industry that its equipment is safe.

Lord John Brown, the former chief executive of BP, resigned as chairman of Huawei Technologies last year. Sir Mike Rake, the former chief executive of British Telecom, followed suit in March of this year.

Huawei said: “Political decisions not only have a real impact on our business in the UK, the people we hire and our customers, they will also delay the launch of 5G and put the UK into the slow lane of digitalization.”

The US authorities were the first to accuse Huawei and put pressure on countries around the world to stop using the company to supply equipment for critical networks. The move to prevent American companies from supplying Huawei means that it cannot use software for its consumer products, such as Android-based smartphones, and it is difficult to purchase chips.

With the blockade of 5G equipment, the full impact of the British government’s ban may be reflected in the 2021 accounts. The Chinese company is still doing business in the country, providing broadband equipment, and has a lot of research resources in the country. Despite the government ban, it still insists on plans to build new photonics facilities outside of Cambridge.