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Global Financial Crisis Hits Huawei's Terminal Unit Sale

October 13, 2008
Business

Huawei Technologies, one of China's largest telecom equipment makers, said it had suspended the auction of a stake in its terminal unit to foreign companies because of the global financial crisis.

The company has passed the information to its potential investors. Huawei representatives say that the current market and economic situations are not clear, so despite the strong interest of investors, it is the best choice to halt the sale to protect the company's interest as the global financial market continues to deteriorate. The sale will be restarted when the timing is right, the company adds.

According to the official statistics from Huawei, its terminal division made revenue of USD2.2 billion in 2007 and by September 2008, the global shipments of this division has reached 150 million, with an average annual compound growth rate of 72% over the past three years.

The Shenzhen-headquartered company formally invited five potential buyers to make bids for its estimated USD4 billion terminal unit, which includes businesses of mobile phones, data cards for notebook PCs, ADSL modems and home routers, in mid-May 2008. Two U.S. private equity groups Bain Capital and Silver Lake have been negotiating with Huawei and hoped to cut the value of the deal because the economic crisis has dealt a blow to most U.S. financial institutions, but Huawei rejected this, according to insiders.

Tags: ADSL | auction | Bain Capital | capital | China | data | Economy | equipment | finance | financial | financial crisis | Guangdong | Huawei | investment | IT | mobile | notebook | PCS | private equity | revenue | Shenzhen | Silver Lake | statistics | telecom | terminal | Three | U.S.

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