Huawei’s growth in France has come to a halt. The Chinese telecommunications equipment maker lost 125.2 million euros in revenue last year, down 8.7% from 2019, to 1.28 billion euros. It thus returns to its level of 2018. Worse still, operating income fell 16.8% to 47.18 million euros over the same period. A historic drop.
There are two reasons for this poor result. On the one hand, certain mobile network deployment operations were suspended during the containment phases and, at the same time, the closure of operator shops has affected smartphone sales. This activity also suffered in 2020 from the “listing of Huawei on the ‘Entity list’ of the US Bureau of Industry and Security”, which “forced the company to no longer be able to install the Android operating system on its new mobile phones. This has strongly affected the sales of the two premium ranges, Mate and P, “said Huawei.
Impact of the anti-Huawei law passed in 2019
On the other hand, the Shenzhen group suffered from the new law adopted by the French government. Due to new provisions on networks and national security, mobile operators must obtain authorization from the administration, the National Agency for Information Systems Security, to deploy 5G antennas. Those provided by Huawei are very often banned due to suspicion of the risk of espionage or sabotage, accusations that the company has always defended. “This represents an additional challenge for the development of the company,” notes Huawei.
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However, the firm posted higher profitability than in 2019 at 41.5 million euros (+ 4.3%). The explanation is simple. It received a tax credit of 12.28 million euros in 2020 thanks to these research and development activities. A sixth research center, in France, was even inaugurated in Paris last October, the Lagrange center. And a production plant will open in 2023 in eastern France.
Despite the difficulties, Huawei therefore continues to bet on the Old Continent because it does not really have a choice. The Europe, Middle East and Africa zone represents its second most important region after China. But turnover fell by 12.2% in 2020.
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Overall, the multinational posted an increase in its activity of 3.8% thanks to the dynamism of its domestic market to 116.5 billion euros. According to the Ministry of Industry and Information Technology, China had 260 million 5G subscribers at the end of February.
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