Vendors Turn upside down, to Clash in 5G

Updated:2017/9/1 17:23

The global telecommunication device market has been dominated by two foreign vendors Ericsson and Nokia, and two Chinese ones Huawei and ZTE since the merger of Nokia and Alcatel-Lucent in April 2015. The four giants compete fiercely, welcoming the 5G era.

Operators nearly end the investment in 4G, and a continuous decline is expected in the future.

Industry insiders think 5G can be a great change: It is beyond the scope of the communications industry, pushing the vendors to invest in technology R&D and to get prepared for the future.

With decreasing investments in 4G and distant investments in 5G, equipment vendors have been unsustainable in 2017.

The four major vendors released the interim results recently, of which some are miserable and the others are bleak.

The results point to a future in which it is possible for the Chinese vendors to lead the global 5G market with the accumulation of 3G and 4G technologies.

The first half year financial results of the four giants form stark contrasts.

Ericsson's operating revenue dropped 11 percent in Q1 and decreased 8 percent in Q2 with a 7 percent operating margin, lost $1.45 billion in the first half and estimated the situation will not be optimistic in the second half.

Nokia's operating revenue was down 2.4 percent in Q1 and slightly up 0.7 percent in Q2 with a 8.2 percent operating margin, lost €173 million in the first half and expected a decline of 3-5 percent for the whole year.

Huawei raised operating revenue by 15 percent in 1H17, reaching $41.8 billion, far larger than Nokia and Ericsson, with a 11 percent operating margin. Though slipping from one year ago, Huawei has achieved relatively good performance compared with the two foreign vendors.

ZTE showed a bright spot, gaining operating revenue of CNY54 billion with a 13 percent year-on-year increase, and operating profit of CNY3.3 billion with a 565 percent growth; its net profit surged 30 percent to CNY2.3 billion from one year earlier, setting a historical record. Its business development returned to the steady growth very soon after the reconciliation with the U.S. government with the constantly perfect management.

All told, the two foreign vendors showed declines in the performance and face grim development prospects while the two Chinese firms have kept a good growth despite the falling capex over the whole industry.

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