Telecom operators’ Capex dip forces Huawei to revise revenue target for 2012

Telecom Lead India: 2G spectrum issue and the related uncertainties have forced one more telecom equipment vendor to cut its revenue target for India.

Cai Liqun, chief executive officer, Huawei India


According to Wall Street Journal, Huawei Technologies said sales in India are likely to be flat rather than grow by 40 percent in 2012. It has revised its target in the wake of telecom operators cutting down spending due to slowing industry growth, regulatory uncertainties and spectrum issues.

“There have also been some real challenging times with regard to cancellation of licenses of some of our telecommunications customers,” said Cai Liqun, chief executive of Huawei India.

Huawei India expects 2012 sales to be around last year’s $1.2 billion.

Huawei expects the situation to stabilize after the bandwidth is reauctioned by January 11, 2013. There will be more Capex coming from TD-LTE players such as Tikona Digital as well.

The Chinese telecom equipment maker is also banking on a project by the Indian government to set up a national optical fiber network at a cost of $3.6 billion to drive growth in 2013.

The Indian telecom industry is yet to get a clear picture about the response from big and regional operators to the forthcoming 2G auction.

Recently, Etisalat and MTNL said they will not be participating in the 2G auction. Etisalat does not want to re-enter to Indian telecom market. The state-run MTNL has enough spectrum to run mobile services in Mumbai and Delhi.

Huawei’s revision in revenue is happening at a time when telecom equipment industry is looking forward for investments in Asia.

Recently, Infonetics Research said it is expecting a spike in Capex in 2012 as operators around the world ramp their spending like crazy to launch LTE networks, modernize their mobile networks, and carry out national wireline broadband initiatives. Asia will be driving the Capex growth.

According to a poll by Crisil, the domestic sectors where Capex is expected to decline significantly are cement, textiles, telecom and automobiles. Most of the total planned Capex of Rs 2.7 trillion in 2012-13 by polled companies is towards existing ongoing projects; only about one-fourth is towards new projects. Close to half of the companies also indicated that they have no plans of starting any new projects in 2012-13.

Meanwhile, chip major Intel expects third-quarter revenue to be $13.2 billion, plus or minus $300 million, compared to the previous expectation of $13.8 billion to $14.8 billion.

Intel is seeing customers reducing inventory in the supply chain versus the normal growth in third-quarter inventory; softness in the enterprise PC market segment; and slowing emerging market demand. The data center business is meeting expectations.

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