Huawei Bides Time, Disavows Interest in Alcatel-Lucent

Rumors had been circulating that Alcatel-Lucent might be an acquisition target of Huawei, the ambitious and strengthening Chinese telecommunications-equipment vendor.

Well, Huawei has told us not to give that blather a second thought.

Ross Gan, Huawei’s global head of corporate communications, presumably with the approval of those above him in the chain of command, said the following:

“Our customer-centric innovation strategy is driving Huawei’s growth and that remains our strategy. Huawei has no plans to take a stake in Alcatel-Lucent.”

That’s an unambiguous statement, though admittedly Huawei’s plans, like those of any other vendor, are subject to change at later dates.

Considering that the chatter alluded to a potential Chinese acquirer of Alcatel-Lucent, perhaps Huawei’s rival, ZTE Corp., might be sizing up the Franco-American telecommunications-equipment monstrosity (and not in a good way) for purchase.

That, too, is an unlikely scenario. A PR representative from ZTE said the acquisition talk probably was just a rumor. That’ s not an unambiguous denial along the lines of the statement issued by Huawei, but nor is it a strong indication that a deal is in the works.

Consolidation is occurring in a telecommunications-equipment market that has been severely battered by two protracted and punishing downturns in the last decade. Companies have gone out of business, and further M&A activity, driven more by sellers’ desperation than by prospects of market growth, are on the horizon.

Nonetheless, Huawei and ZTE aren’t in a rush to pull out their checkbooks or call their investment bankers. Time, you see, is on their side.

Huawei, after many fits and starts, is finally making tangible sales progress with North American carriers after winning patronage in many European accounts, and ZTE has similar aspirations. Both companies are heading in the right directions, figuratively and geographically.

Why should Huawei, in particular, tilt at regulatory windmills — remember its involvement in the aborted Bain Capital deal for networking-equipment vendor 3Com? — when it can play a patient waiting game? There’s no rush. Alcatel-Lucent, presuming Huawei wants it, isn’t going anywhere. None of the other major telecommunications-equipment vendors seemed poised to take it out.

In Huawei’s collective mind, the regulatory environments in the USA and Europe could evolve. As Huawei becomes more of a known entity, and as the situation worsens for less-fortunate vendors in the telecommunications-equipment space, Huawei might find that regulatory resistance slowly transforms into something approaching an embrace.

About these ads

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s