Huawei open to IPO as it may surpass Ericsson sales



Beijing: Huawei, China's largest maker of telecommunications equipment, said it has an 'open mind' about offering shares to the public after posting sales that probably surpassed Ericsson's.

A decision to hold an initial public offering (IPO) would depend on shareholders' interests, as the company has no immediate need to raise funds, chief financial officer Cathy Meng Wanzhou said yesterday at a briefing in Beijing. The company expects sales to rise as much as 12 per cent this year following an 8 per cent increase last year, she said.

An IPO may help closely held Huawei expand overseas by boosting transparency and reducing security concerns, said Pierre Ferragu, a Sanford C. Bernstein analyst. The US House Intelligence Committee in October recommended that local companies avoid equipment made by Huawei, whose founder served in the Chinese military, citing concerns the communist nation could install malicious hardware or software in US networks.

Profit surges
"Perception is a major issue here," said London-based Ferragu.
"A listing would be a strong help, but I doubt the company is ready for this given the implications on the governance and management model."

It may take about a decade for Huawei to be perceived as 'a normal company' worldwide, he said. The House Intelligence Committee also said US companies should steer clear of another Chinese maker of telecommunications equipment, ZTE Corporation.

Huawei's sales last year rose to 220 billion yuan ($35.4 billion), helping boost net income 33 per cent to 15.4 billion yuan, Meng said. The event was the first media briefing for the 40-year-old CFO, who is the daughter of Huawei founder Ren Zhengfei.

The equipment-maker had $4.5 billion of working capital at the end of last year, on record cash flow of $12 billion, Meng said. It also has credit lines totalling $33 billion, 77 per cent of which comes from banks outside of China.

Huawei is employee-owned, with about 65,000 staff members holding shares.

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