Huawei Considers Selling Stake in Mobile Phones Division

China's Huawei is reported to be considering selling a stake in its mobile phones division to foreign investors in exchange for access to the US market. The company was recently thwarted in its attempt to take a minority stake in US based 3Com following a backlash from US politicians over company founder and president Ren Zhengfei's military background.

The Wall Street Journal reported that the company was being advised by Morgan Stanley as it sought to sell a multibillion-dollar stake in the business.

Towards the end of this month, Huawei plans to invite strategic investors and private equity firms to make offers for a large portion of its mobile devices division, with the possibility that one foreign company could obtain a controlling interest in the division.

The newspaper said that Huawei plans to sell off its mobile phone, laptop, wireless data-card and home router businesses - retaining its network infrastructure division.

The divestment of the handset division into a separate company could well fuel speculation about industry consolidation - particularly as Motorola's handset division is being spun off into a separate company at the moment.

The company doesn't publicly release breakdowns of the revenues or profits of different divisions, but the sources told the newspaper that the division up for sale is profitable and that the sale isn't meant as an exit from the business. The company was recently reports as aiming to increase its handset production to 50 million units per year. Huawei currently outsources its handset manufacturing to Thailand based Cal-Comp Electronics and Singapore headquartered Flextronics.

Huawei has existing agreements to provide operator branded mobile phones to Vodafone and Telia - as well as USB 3G modems for several operators, including Hutchison 3G.

On the web: Wall Street Journal

Posted to the site on 9th May 2008