Huawei: Sales to U.S. carriers grew 10-15% last year, will likely grow more this year

NASHVILLE -- Despite being effectively banned from selling its network equipment to tier-one U.S. wireless carriers like Verizon and AT&T, China's Huawei said it is growing its sales to smaller wireless carriers in the United States. The company currently counts the likes of Union Wireless, United Wireless and Pioneer Telecom as customers, and a top Huawei executive said the company is testing its equipment with a "handful" of new tier-two and tier-three wireless carrier customers.

Maurice D'Souza, senior manager of Huawei's American carrier sales and marketing, said the company grew its revenues from U.S. wireless carriers by 10-15 percent between 2014 and 2015, and he said the company expects to grow again this year. He declined to name the new carriers that are testing Huawei's equipment, but said they are larger regional wireless operators with networks stretching across multiple U.S. states.

D'Souza said existing Huawei customers in the United States, including Pioneer and others, generally have purchased the company's base stations, antennas and, in some cases, the company's core network products. D'Souza declined to provide additional details, including which customers have purchased which products.

"We're also working with a multitude of WISPs," D'Souza added. He explained that these wireless internet service providers generally count only 100 to 2,000 subscribers, and generally purchase only a handful of Huawei products such as customer-premises equipment, radio units and, in some cases, EPCs. But he said Huawei is growing its WISP customer base in the United States.

"It is growing," D'Souza said of Huawei's U.S. sales.

D'Souza made his comments here at the Competitive Carriers Association's Mobile Carriers Show, and his remarks largely dovetail with a similar outlook Huawei offered at the same show a year ago. In 2015, Patrick Kaiser, Huawei's director of wireless-product management in North America, said that the company added eight new U.S. wireless or wireline customers in 2014, and that, overall, Huawei works with more than 50 U.S. carriers, including 30 wireless operators.

Globally, Huawei is second only to Ericsson in the worldwide macrocell infrastructure market, according to fourth-quarter numbers from IHS Technology. However, the recently consummated combination of Nokia and Alcatel-Lucent likely creates a three-way race among Nokia, Huawei and Ericsson.

But Huawei has a handicap in that race. A U.S. government report issued in 2012 labeled China-based network vendors Huawei and ZTE as security threats that could be used as backdoors for Chinese espionage. Both companies have repeatedly said the claims are without merit, but the report has largely blocked Huawei from selling equipment to the nation's tier-one wireless operators like Verizon and AT&T.

As a result of the report, D'Souza said Huawei focused on smaller wireless operators, a strategy he said continues to bear fruit.

Globally, too, Huawei continues to grow. The company posted a 33 percent increase in net profit in 2015 over the previous year thanks to soaring smartphone sales and increasing demand for 4G network gear. Huawei said revenues increased 37 percent year-over-year in 2015 to $60.8 billion, and net profit came in at $5.7 billion. Gross margin fell to 41.7 percent, though, down 2.5 percent from the prior year, due to increased investment in research and development.

 Related articles:
Huawei sees 33% increase in net profit on rising sales of smartphones, network gear
Huawei could benefit in U.S. from easing security concerns and Nokia-Alca-Lu merger, exec says
Should Huawei, ZTE and other Chinese firms be allowed back into U.S. wireless market?
Huawei exec: We treat Tier 3 U.S. carriers like they're the 'belle of the ball'

Article updated April 15 to correct Huawei's list of customers.

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