Tag Archives: telecoms

TRADE: Micron, China Mobile Muddy US-China Trade Tensions

Bottom line: A court order barring Micron Technology from China and Donald Trump’s attempts to keep China Mobile out of the US reflect blurring lines between business and politics in heightening US-China trade tensions.

Fujian court bars Micron sales in China

Two new headlines are showing how trade tensions between the US and China are spilling over into the high-tech realm, while also reflecting a certain amount of confusion and twisting of the facts. Leading the somewhat misleading headlines is an item that has U.S. memory chip giant Micron (Nasdaq: MU) suddenly being shut out of China for a number of its products due to a patent dispute. The other headline has Donald Trump saying that leading Chinese telco China Mobile (HKEx: 941; NYSE: CHL) shouldn’t be allowed to offer services in the US due to national security concerns.

The Micron story is being spun by some media as having a US-China trade tensions angle, when really that’s not the case and it’s just a typical patent dispute. The same could be said for the much larger case involving a US ban on telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 000063), which is being spun as part of US-China trade tensions, even though ZTE is being punished for violating much older US sanctions against sales to Iran. China Mobile, on the other hand, is clearly a Trump pet project and does reflect his protectionist tendencies. Read Full Post…

TELECOM: What’s Next After ZTE Resolution of ZTE Case

Bottom line: ZTE will experience fallout from its run-in with Washington through much of next year, and could see an even longer-term hit to its global business as international customers start to look for alternate suppliers.

ZTE off life support, but major challenges remain

The saga of embattled smartphone and telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 00006) appears to be nearing an end, as trading resumed in the company’s stock following an official settlement with Washington over  illegal sales to Iran. The ending to this story certainly came with a big climax, with ZTE shares plunging by 42 percent in Hong Kong on the first day after trading resumed.

They fell by a smaller 10 percent in China on Wednesday, but only because China places a 10 percent limit on daily rises and declines in individual stock prices. Not surprisingly, the stock was down another 10 percent in China on its second day of trade, while the Hong Kong shares did a dead cat bounce and were up slightly. Read Full Post…

TELECOMS: China Mobile 4G Users Decline for First-Time

Bottom line: China Mobile’s first-ever drop in 4G subscribers in April owes to the company’s early arrival to the space, and reflects the broader market’s maturation that is also adding similar pressures to Unicom and China Telecom.

China Mobile 4G users takes first-ever dip

Much ado is being made about new data from the three big telcos that includes a first-ever drop in 4G subscribers for industry heavyweight China Mobile (HKEx: 941; NYSE: CHL). This particular first seems to have been a long time coming, and really shouldn’t surprise anyone too much. The fact of the matter is that China’s mobile market has been nearing saturation for a while, and the nation’s big 3 telcos have been increasingly stealing customers from each other for the last two or three years as the number of unserved users dwindles.

The bigger question raised by this data is what the slowdown could mean over the longer term, when China Mobile and smaller peers Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA) might see slow or negative growth in subscriber terms. The answer to that question is that this trio will be able to feast on their protected home market for many years to come, though they may be forced to innovate a bit more in order to get a tapped-out audience to keep paying more for services. Read Full Post…

TELECOMS: ZTE Slapped with US Sanctions — Again

Bottom line: Washington’s new ban on ZTE from buying US-made components is not as political as China is portraying it, and is likely to be resolved within a few weeks after ZTE takes remedial actions related to its violation of an earlier agreement.

Washington cuts off ZTE from US suppliers

An ongoing tiff between Washington and ZTE (HKEx: 763; Shenzhen: 000063) is in the headlines yet again, with word that the US has banned all American companies from selling to the Chinese smartphone and telecoms equipment maker for seven years. This particular story is filled with political overtones due to the anti-China stance of Donald Trump, who has accused Beijing of unfair trade practices. But it’s also a tale that stretches back for at least six years, which means this story began well before the current US administration.

The latest headlines are quite straightforward, and have Washington banning the sale of US-made telecoms equipment to ZTE for violating an earlier agreement reached last year. (English article) The source of this conflict dates back to 2012, when Washington first began probing ZTE for selling American-made equipment to Iran in violation of US sanctions that at that time were designed to punish the country for its nuclear program. Read Full Post…

TELECOMS: 5G Buzzes Early Into China

Bottom line: A bevy of signals from Beijing indicate China will roll out 5G networks around 2020, in step with major Western markets, providing a boon for telcos, equipment sellers and Internet companies.

China gets serious on 5G

After years of watching China following years behind the West in rolling out its next-generation wireless networks, there are growing signs that the country intends to be a leader rather than a laggard with upcoming 5G service. The latest signal in that drive is coming from the country’s state planner, which has just announced that five or more cities will start to build rudimentary 5G networks starting next year.

All this may sound quite boring for many of my readers who are more interested in high-tech companies than stodgy telecoms carriers. But it really has huge implications for not only China’s big 3 telcos, but also the nation’s booming Internet industry that will become the direct beneficiaries of 5G networks that offer data speeds that are well ahead of what you can get from current 4G technology. Read Full Post…

SMARTPHONES: Huawei Unseats Apple, Eyes the Cloud

Bottom line: Huawei could overtake Apple as the world’s second largest smartphone seller in the next 1-2 years, while it could also pose a challenge in global cloud services over the next 5 years.

Huawei takes a shot at the cloud

We’ll begin the new week with a couple of items from Huawei that show how the company that began as a telecoms network builder looks set to unseat fading PC giant Lenovo (HKEx: 992) as China’s global leader in consumer tech. The first of those has one research house releasing data that show Huawei’s smartphones surpassed Apple (Nasdaq: AAPL) for two consecutive months in June and July to become the world’s second largest brand. The second has a Huawei executive discussing his plans for the company’s cloud computing services, saying he wants to become a global top 5 player.

The first headline shows that Huawei is not a company to be taken lightly, which means that people should pay close attention to the second headline. In my years of covering Huawei, the company has proven to be quite focused and determined, and pours large amounts of money into product development to make sure it can meet its goals. It focused its early efforts on building traditional telecoms networks, but more recently has moved to enterprise networks and consumer devices like smartphones and notebook computer. Read Full Post…

TELECOMS: Huawei in US Hot Seat Over Iran Sales?

Bottom line: Huawei is likely to be found guilty of selling products to Iran in violation of US sanctions, and could be fined up to $2 billion but won’t face additional punishment.

Huawei being probed for Iran violations?

When word first emerged four years ago that telecoms equipment maker ZTE (HKEx: 763; Shenzhen: 000063) was being investigated for selling American equipment to Iran in violation of US sanctions, other reports also indicated that crosstown rival Huawei was also being probed over the same matter. Huawei’s name later disappeared from the headlines, though it was never really clear if the company had been cleared of suspicion in the matter. Now it appears the company may still be under investigation, meaning it could potentially be slapped with a fine even bigger than the nearly $1 billion levied on ZTE. Read Full Post…

TELECOMS: China Telecom Displays Aggression, Unicom Conservatism

Bottom line: China Telecom’s aggressive bidding for a government contract highlights its more entrepreneurial style, while Unicom’s latest announcement on its private ownership plans reflects it conservative, bureaucratic style.

Unicom mixed ownership program crawls ahead

Two of China’s trio of wireless telcos are in the news today, reflecting an effort by Beijing to breathe some life into these laggard state-run behemoths that always seem unable to realize their potential. The first headline has China Telecom (HKex: 728; NYSE: CHA), the smallest of the nation’s 3 carriers, making an aggressive bid to essentially provide services  for free to a government agency in northeast Liaoning province. The second has Unicom (HKEx: 762; NYSE: CHU), the second largest carrier, disclosing some more details on its plan to introduce some private capital to the company. Read Full Post…

TELECOMS: ZTE Settles with US, Looks Forward

Bottom line: ZTE’s settlement with the US over illegal sales to Iran will help the company focus on the future, as it advances with plans to move away from low-margin businesses and find more promising new growth areas.

ZTE settles US accusations of illegal sales to Iran

After a year of living in a state akin to suspended animation amid a US probe against it for illegal sales to Iran, telecoms giant ZTE (HKEx: 763; Shenzhen: 000063) is finally seeing some light at the end of the tunnel, with word that it has finally reached a settlement in the matter. The company previously indicated the settlement would be no small deal, and the nearly $900 million fine it will have to pay proves that’s certainly the case.

But more important is the fact that ZTE has finally settled the case, meaning it can now get on with business without this major distraction hanging over its head. Before the settlement, ZTE had faced the possibility that it might get cut off from its key US suppliers as punishment for illegally selling US-made equipment to Iran in violation of earlier US sanctions against the country related to its nuclear program. Read Full Post…

TELECOMS: Huawei Declares End to Growth at Any Cost

Bottom line: Huawei’s revenue growth for 2017 is likely to drop by more than half from 2016’s rate of 32 percent as it cuts its money-losing businesses, with the biggest slowdown likely to come in its smartphone unit.

Huawei to focus on profitability in 2017

Quality over quantity is a growing theme in China these days, as the nation puts aside its previous pursuit of high growth at any cost in exchange for more sustainable expansion in high-quality areas. After starting at the top in Beijing, that theme is trickling down the corporate food chain to telecoms giant Huawei, whose New Year’s message hints that company growth could slow sharply this year.

Or course everything is relative, since Huawei has just announced preliminary results that show its revenue for 2016 jumped an impressive 32 percent to 520 billion yuan, or a whopping $74 billion. To put things in perspective, its biggest global rival Ericsson (Stockholm: ERICb) is seeing its sales contract, and is expected to post about $65 billion in revenue this year. Read Full Post…

TELECOMS: Unicom Seeks New Life with BAT Magic

Bottom line: Unicom is likely to choose all 3 of the BAT companies as equity and strategic partners under Beijing’s pilot program to invigorate big state-run companies, but none of the tie-ups will produce meaningful results.  

Unicom eyes BAT partnerships

China Unicom (HKEx: 762; NYSE: CHU), the perennial laggard among China’s 3 major telcos, is reportedly looking for new life by tying up with the nation’s big 3 Internet companies, Tencent (HKEx: 700), Alibaba (NYSE: BABA) and Baidu (Nasdaq: BIDU). I might normally say “so what?” to this particular development, since it seems like Unicom and its 2 fellow state-run telcos are regularly announcing this kind of partnership, always with little or no meaningful impact on their business. Read Full Post…