Huawei India has been on a growth drive. The company plans to launch twenty new models in its CDMA handset division. While earlier it was focusing only on low-end models, from this year onward it will manufacture mid-end handsets as well. It has also started bundling GSM handsets for a major telecom operator. Huawei is believed to have expertise in the arena of 3G, and once the government makes the 3G spectrums available, Huawei India would be all set to roll its products and services in the segment.

Besides, from a revenue of only $200 mn in FY 2006-07, Huawei grew three times in the last fiscal to touch $600 mn. The company also has plans to double its revenue in the current fiscal. Of the $600 mn, about $350 mn came from its wireless operations, about $100 mn from transmission, $100 mn from handsets, and $50 mn from its broadband division.

The anticipated growth in the company's revenue in the current year is likely to come from GSM and 3G. Huawei is already in talk with some vendors for 3G. Its 3G contract with Bharti in Sri Lanka was a major breakthrough for the company in the Indian region. Apart from this, FTTx, WiMax trials, and lab tests have also helped demonstrate the company's readiness to tap growing markets. The company has got some important deals recently, including a $300 mn GSM expansion deal from Reliance and $200 mn deal from Airtel in Sri Lanka to supply network for managed services.

Huawei has also acquired some 20 acres of land in Bangalore and is planning to build a campus with a seating facility of 2,000 in the first phase, which should be operational by 2010. The company already has an R&D center in Bangalore, which is the largest overseas development center for Huawei. The Indian R&D center focuses on software development in technologies like IP, new generation networks, optical transmission software, and mobile handset software. As of now, more than 200 patent applications have been filed from India.

This is probably only a beginning for the company as it charts its path to double its turnover in the current fiscal. This won't be too difficult for Huawei as equipment vendors are headed for a growth explosion with operators making huge investments to roll out operations in different regions. We spoke to Max Young, CEO, Huawei India to discuss the company's strategy.

There is movement from CDMA toward GSM. And given that you are prominently a CDMA player, is there going to be a change in your focus?
We believe that our main opportunity lies in the GSM space. And we have been speaking with many vendors in this regard since the current network is not complete. It is not big enough for the emerging technologies and there is immense scope for expansion. Apart from this, convergence of voice, data, and video will also create more opportunities. The main percentage of our growth is going to come from the GSM segment. Though, CDMA will also continue to grow, we do not expect a very strong growth.

What are the challenges that you've faced in the Indian market?
We feel that our services team is not big enough to support our customers. We have to increase our manpower. However, there is no shortage of good manpower in the country. We merely need to increase our headcount.

What have been your developments on the R&D front?
We have an R&D center in Bangalore, which is our largest overseas center. The center is engaged in developing software platforms and components in wireless, optical, datacom, and core networks. It currently employs 1,400 Indian software engineers and plans to increase the number to 2,500. We have also planned an investment of $100 mn in the coming years.

What is Huawei's broadband infrastructure industry outlook for FY 2008-09?
Though broadband constituted a small part of our revenue in the last fiscal, we believe that the segment will grow, and will continue to be one of our focus areas. In FY 2008-09, the broadband sector is expected to witness significant expansion. However, the unbundling of the last-mile, as well as spectrum allocation for broadband wireless access will remain key issues that will impact the segment. The delay in 3G and WiMax rollouts shall witness increased penetration of DSL as a viable broadband technology. At the same time, trial networks are also expected to be rolled out for WiMax and 3G. And considering the scenario, I would like to believe that we should grow substantially in the broadband market, as we believe in customizing the right solutions for service providers in a cost efficient manner.

What do you think are the main market trends abroad and in India?
In terms of the absolute number of Internet subscribers, India ranks fifth behind the US, China, Japan, and Germany. In March 2008, China overtook the US to become the largest Internet market with more than 220 mn users, leaving the US behind at 217 mn. With the Internet penetration rate in India just over 6%, there is a huge potential waiting to be tapped. With broadband users just over 3.5 mn, technologies such as WiMax, 3G, and other wireless broadband technologies are expected to dominate the unutilized potential of the Indian broadband market.

India currently has 135 operational Internet service providers (ISPs). Among these, about seventy-two players offer broadband services. And though there are a large number of players, the broadband industry is dominated by six key players (BSNL, MTNL, Bharti, Reliance, Tata, and Sify), that control more than 85% market share. BSNL and MTNL together comprise more than 66% of the total market. The key growth drivers for broadband in India are mobile Internet, gaming, mobile video, and increase in PC literacy. Apart from this, e-education, e-ticketing, e-health, e-commerce, lower ARPU, and support from the government will further drive the growth of broadband in the country.

What have been the latest technology additions in FY 2007-08?
While over 80% of the Indian broadband subscribers have DSL connections, the latest technology additions have been based on FTTx, Wi-Fi, VSATs, etc. Service providers are developing alternatives to offset the absence of unbundling the local loop. Bharti in addition to BSNL/MTNL also underwent copper infrastructure augmentation.

Sify has deployed broadband on a hybrid fixed wireless technology that includes an Ethernet-based network and a wireless network for last mile connectivity. While xDSL shall be deployed increasingly, WiMax and 3G shall be deployed with the pace that will be set by the spectrum auction and the regulation.

What were your achievements in the last fiscal?
It was a good year for us. We have grown three times and have started to play an important role in the Indian telecommunications industry. We also started our GSM operations. We are looking forward to an exciting year and we plan to double our revenue in the current fiscal.

Our 3G contract with Bharti in Sri Lanka was a major breakthrough for us in the Indian region. FTTx, WiMax trials, and lab tests have further helped in demonstrating our readiness to tap this huge market.

What are your initiatives in the arena of corporate social responsibility?
We have formed a partnership with International Institute of Information Technology (IIIT), Bangalore to provide scholarships of excellence to meritorious students of the institute. We have also set up a social initiative in association with Concern India Foundation directed toward educating girl children in Delhi.

Gagandeep Kaur
gagandeepk@cybermedia.co.in