Huawei reported robust year-over-year revenue growth indicating that the China-based vendor is firmly entrenched in the telecom market despite widening efforts from the U.S. government to block its equipment in multiple countries around the world.
The company reported a 39% year-over-year increase in revenue for the first quarter of 2019. Revenues reached $26.79 billion during the quarter with a net profit margin of 8%, which Huawei said was slightly higher than the year-ago period, but declined to put an actual number on its total net profit.
The company also reported that it had inked 40 contracts for 5G commercial networks by the end of March. More than 70,000 5G base stations have already been shipped and Huawei says that number will eclipse 100,000 units by May.
Despite that rosy outlook, Huawei is waging war on multiple fronts. Allegations of espionage, intellectual property theft, security vulnerabilities in its software, and the detention of its CFO Wanzhou Meng (at the request of the U.S. government) have yet to impact the company’s bottom line.
Huawei denies all wrongdoing and filed a lawsuit against the U.S. government last month to challenge a ban on its equipment. The company has never been caught in an act of espionage and U.S. officials have never publicly provided proof to support its claims.
“Time will tell if the U.S.-led campaign will kick Huawei out of its existing customer base in the rest of the world,” said William Ho, principal analyst at 556 Ventures. “The rebuffs from European countries, if it holds, should allow Huawei further European traction. To some extent, Huawei has been proactively messaging transparency with those customers by creating a European cybersecurity center to help allay fears. However, it’s a tenuous path if the U.S. continues to ratchet pressure and can provide damaging evidence against Huawei.”
Ho expects Huawei’s infrastructure and smartphone business segments to continue to be the main drivers for growth. “Perhaps as 5G accelerates that segment will see an increase in overall revenue contribution over the quarters,” he said.
Huawei emphasized the 5G opportunity by calling 2019 a “year of large-scale deployment of 5G around the world” that positions its carrier business for “unprecedented opportunities for growth.” Earlier this month, when the company invited analysts to its sprawling and opulent headquarters in Shenzhen, China, Huawei said it expects the evolution to 5G networks to drive growth of at least 10% in its carrier business this year.
The company also detailed advancements to its 5G core network strategy and SingleRAN Pro platform, including plans to pursue a more rapid pace of innovation.