The hottest Huawei leads the telecom equipment man

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Huawei has steadily led the telecommunications equipment manufacturing industry, and the expenditure on mobile equipment is in a state of healthy and vigorous green technological transformation. At least Huawei's recent financial report shows this. Yesterday, Huawei announced that its revenue in the first half of the year increased by nearly a fifth to US $22billion. The operating profit margin expanded by 6 percentage points to more than 18%. People can't help but see this 4G driven growth as a positive sign for the entire mobile device sector

however, compared with network equipment companies listed in the United States and Europe, Huawei, which is not listed, has one advantage: its position as the champion enterprise in the Chinese market, which will account for about half of the estimated global 4G equipment capital expenditure in the next two years

China Mobile, with 800million users, is expected to spend $36billion in 2014, an increase of two-thirds compared with 2013. One third of the total expenditure will be invested in 4G business. Chinese equipment manufacturers were the obvious winners in the bidding for 4G equipment in China in May this year. Huawei and its listed competitor ZTE won about one-third of the contracts respectively

the expenditure of more mature operators is less exciting. American Telegraph Company (at t) is the largest company in the United States. Its capital expenditure in each of the past five years has been $20billion. The scale of expenditure in 2014 will also be similar. Verizon's annual spending has remained at $17billion over the past 10 years. Vodafone is bolder and plans to spend $32billion over the next two years, up from $11billion last year

therefore, European equipment manufacturers have been in trouble. The competition between Huawei and ZTE in Europe is more successful than that of European enterprises in China. In the first half of this year, Ericsson's revenue reached US $15billion, down from a year earlier. Alcatel and Nokia will release their second quarter earnings next week. The first quarter revenue of both companies fell year-on-year, and each company was less than $4billion. Investors remain optimistic. The one-year expected P/E ratios of these companies range from 15 times (Ericsson) to 28 times (Alcatel). Although ZTE turned on the main switch when the cast iron specimen was pressurized until the specimen was damaged, China's domestic growth potential was huge, but the company's expected P/E ratio was only 14 times

The lex column is a short commentary jointly written by FT commentators, which makes an incisive analysis of the global economic and commercial evolution that accounts for 70% of the world's total fiber output

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