Enriching Life Through Communication
Annual Report 2007
1 Unique Values
3 Five-Year Summary
4 Business Focus 2007
5 Message from Huawei EMT
7 Continuous Innovation Based on
Customer Needs
25 Products and Services
29 A Culture of Dedication
31 Corporate Social Responsibility
35 Financial Report 2007
Contents
Annual Report 2007
UNIQUE VALUES
Unique Values
Long-Term Partnership
Huawei has realized steady revenue growth for five straight
years, with concomitant contributions from international
markets. Supported by the momentum of well sustained
growth, this solid track record has established Huawei as a
major international supplier.
The company has fulfilled the needs of 70% of the world’s
top 50 telecom companies. Every year, more and more
leading operators achieve long-term benefits from in-depth
partnerships with Huawei.
Continuous Innovation Based on
Customer Needs
The company has maintained a strategy of continuous
customer-centric innovation. Product R&D has remained
responsive to projected and actual customer needs. With
the goal of maximizing customer benefits and values, we
continuously improved our technologies, solutions and services.
For enhanced customer correspondence and optimal response,
we established joint innovation centers with Vodafone, British
Telecom, Telecom Italia, France Telecom, Telefonica and
Deutsche Telekom. These centers expedite the translation
of technological advantages into time and efficiency critical
competitive advantages.
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UNIQUE VALUES
Leading Solutions and Fast Response
Huawei has established a head start advantage in future-oriented
transformation. Our next generation products and services
embrace mobile, broadband, IP, optical network, value-added
services and terminals, offering customers the most competitive
telecom solutions.
Adhering to our proximity strategy, Huawei relocated essential
decision-making centers, such as those of sales departments,
financial departments and supply chains, to regional divisions.
The company also established a three-level (local, regional and
corporate) global service system to more precisely understand
customers’ demands and quickly respond with the most
appropriate professional support.
High Caliber Operations
Internationally, Huawei has achieved notable and increasing
success at multiple levels of operations management from
improved product deployment and enhanced quality controls to
expedited network solutions and services, embracing the strict
ethical requirements of all strategic partners including leading
operators throughout Europe and in other developed markets.
In 2007, Huawei inaugurated the IFS (Integrated Financial Service)
program, addressing all essential financial reporting functionalities
from a highly responsive worldwide platform. The new IFS program
provides a uniquely strong backbone for Huawei’s future business
expansion and fulfillment of our global strategic goals. IFS’s
capabilities also fulfill the essential role of extending and deepening
our partnership with leading operators.
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FIVE-YEAR SUMMARY
Five-Year Summary
Years ended 31 December 2007 2006 2005 2004 2003
Revenue 12,560 8,504 5,982 3,827 2,694
Net Income 674 512 681 624 384
Cash Flows From Operations 843 743 708 396 385
Operating Profit Margin 7% 7% 14% 18% 19%
Return on Net Assets 22% 20% 30% 31% 23%
CAGR: 47% CAGR: 15% CAGR: 22%
0
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12000
14000
0
100
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0
100
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Revenue
(USD in millions)
Net Income
(USD in millions)
Cash Flows from
Operations
(USD in millions)
USD in millions
2,694
3,827
5,982
8,504
12,560
384
624
681
512
674
385 396
708
743
843
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BUSINESS FOCUS 2007
Five-Year Summary Business Focus 2007
Enhanced Mobile Service
n 2007, Huawei was awarded 45% of all new
UMTS/HSPA contracts, garnering the company
the prestige of global category leadership. Huawei
has also become one of the top three suppliers in
the global GSM market. In 2007 alone, 700,000
carrier frequencies of base station were shipped,
the aggregate totals exceeded 1.5 million, serving
over 300 million GSM users worldwide. Most
notably, China Mobile awarded Huawei a 23.6%
slice of a GSM group purchase project. In addition,
Huawei’s market-leading mobile softswitches now
serve more than 670 million subscribers.
Winning 44.8% of all new contracts in 2007, Huawei
has also earned leadership of the global CDMA
category. Besides, the company has deployed 12
commercial WiMAX networks around the world.
Leading Telecom Acknowledgment
uawei has now been selected by a who’s who
of global leading operators, including Vodafone,
British Telecom, Telefonica, France Telecom/Orange
and China Mobile, as a trusted partner for future-
oriented network transformation.
As a singular mark of recognition by the world’s
leading mobile operator, Vodafone awarded
Huawei a 2007 Global Supplier Award citing
delivery of highly competitive products and services
across the group’s network. Huawei was the only
network equipment supplier to be awarded this
specific accolade.
Professional Services
uawei has attached strategic importance
to Professional Services. We have established
a specialized professional services team and
seven managed services centers across the world.
Allowing customers to focus on their core business,
Huawei now provides professional services and
solutions in support of all aspects of network
management, planning and optimization, as well
as consultation and managed services. Huawei’s
services are specifically designed to help operators
innovate business models and sharpen their
competitive edge.
Huawei has achieved rapid growth in Managed
Services, with 34 such contracts awarded by
Vodafone, China Mobile, Etisalat, MTN, Warid and
other international telecom incumbents in 2007.
Environmental Protection and
Energy Conservation
uawei emphasizes the value of “green” in
network deployment, power supply and
product development. The policy of “green” is no
longer solely an aspect of social responsibility; it
has become a proven effective and practical means
for operators to cut operating expenditure and
maintain price competitiveness.
By the end of 2007, Huawei had deployed
over 100,000 GSM green base stations, saving
approximately 570 million kilowatt-hours (kWh) or
170,000 tons of coal.
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MESSAGE FROM HUAWEI EMT5
MESSAGE FROM HUAWEI EMT
Operators hope to gain new revenue streams
through developing all-IP broadband services
while enhancing profitability through optimizing
competitive cost structures. Meanwhile, in many
emerging markets, billions of people are still unable
to access basic communication services. Operators
are focusing on rapid coverage of low ARPU
(Average Revenue Per User) areas. To succeed in this
new industry environment, a demonstrated reliable
equipment supply partner, capable of ensuring
future-oriented transformation and providing on-
target solutions based on deep understanding of
real world challenges, becomes essential.
Globally, nationally or regionally, Huawei is just
such a proven partner. Providing critical support for
operators in this age of all-IP convergence, we have
established comprehensive strengths in all essential
fields, from fixed and mobile network to continuous
data communication technological innovation.
Furthermore, we continuously introduce on-target
and highly competitive products and solutions
designed to enhance operators’ profitability and
Total Value of Ownership (TVO). Universally, Huawei
is committed to cooperating with industry chain
partners to build a winning business ecosystem
with operators at the core to ensure long-term
competitiveness for all parties.
In retrospect, we truly understand your continued
success is at the heart of our sustained growth.
Going forward, Huawei will continue to advocate
a corporate culture of dedication, and encourage
employees to devote themselves to creating long-
term value for customers through consistent hard
work and innovation. Working together, we will
all succeed in enriching life through optimizing
communications across the world.
Executive Management Team
Huawei Technologies Co., Ltd.
Message from Huawei EMT
Dear Colleagues:
n 2007, Huawei realized global contract sales
of USD16 billion, an increase of 45% over 2006.
International markets accounted for 72% of all
sales revenues. Huawei achieved growth of more
than 150% in developed markets such as Europe,
the United States and Japan, while maintaining
strong growth momentum in emerging markets
including the Asia-Pacific region, Latin America, the
Middle East and North Africa. Backed by several
years of steady growth, Huawei has now become
an undisputed industry leader. For this success, we
gratefully credit our customers, our partners and
our employees. Thank you all for your long-term
trust and unflagging support.
The world, as well as the information industry
itself is becoming increasingly flatter as a result of
fast evolving information technologies. Blurring
initial borders, telecom networks, Internet, digital
media and consumer electronics industry are
rapidly converging in the same direction. This trend
exposes the conventional telecom industry to
unprecedented challenges and forces operators to
reconsider and transform their business operating
models in order to maintain position in the industry
chain.
All-IP based FMC has become the consensus
among most operators as the solution for
continued transformation. All-IP architecture
and convergence across every network layer will
help operators simplify network structure, save
transmission and operating costs and enable a
wide variety of innovative applications. End users
will be able to enjoy consistent communication
experiences anytime, anywhere via any terminal.
In developed markets, more and more convergence-
based services are marketed every month.
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CONTINUOUS INNOVATION BASED ON CUSTOMER NEEDS
Continuous Innovation
Based on Customer Needs
7
CONTINUOUS INNOVATION BASED ON CUSTOMER NEEDS
No.4
Huawei ranked as the fourth
largest patent applicant under
the Patent Cooperation Treaty
(PCT) of the World Intellectual
Property Organization (WIPO).
83
Member of 83 standardization
organizations (including ITU,
3GPP and 3GPP2).
35,000
35,000 employees (43% of
all employees worldwide) are
engaged in R&D.
We believe that any advanced technology or product has to
be translated into customers’ commercial success before it can
generate any value. Giving top priority to customers’ specific
needs, Huawei listens attentively and continuously innovates
focusing on individual challenges and opportunities.
Product R&D Driven by Customer Needs
uawei launched the Integrated Product Development (IPD) program.
Product R&D has remained responsive to projected and actual
customer needs. Through widely applied modularization, standardization
and technology sharing, we now present the integrated advantages of
“Speed, Quality and Cost”, to maximize customer benefits and value.
R&D Investment
Huawei reinvested no less than 10% of sales revenue in R&D and 10% of the
R&D budget in cutting-edge technologies and fundamental technologies.
Our R&D system is now applied worldwide. Strategically located R&D
institutes in the US, Europe, India, and throughout China, leverage the
highest quality global human and technological resources.
Patents and Standards
By December of 2007, Huawei had filed 26,880 patent applications in
aggregate. The number of UMTS 3G essential patent applications filed saw
Huawei ranked among world’s top five.
Huawei is a member of 83 standardization organizations (including ITU,
3GPP and 3GPP2) with over one hundred positions accepted. In 2007, a
total of 3,072 proposals were submitted, including over 800 proposals in
fiber transmission, access network, NGN, IP QoS and security, and more
than 1,500 proposals in mobile core network, service application and radio
access.
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CONTINUOUS INNOVATION BASED ON CUSTOMER NEEDS
On 22 December 2007, “EI Gordo” lottery TV show was broadcast as scheduled in
Spain. Through a handset, Mario, who was out of the country on vacation, enjoyed
the live moment simultaneously with countless other mobile TV spectators. In the
past, when traveling, Mario could only discover the drawing result afterwards from
Internet news. “It would have been a shame not to be able to watch the live draw
especially if I won a prize myself!”
Mario is one of 20 million fans of “EI Gordo” in Spain. Previously, to watch the
live draw, aficionados had to stay in front of TV at home. In 2007, things became
different. Irrespective of location, lottery fans can now witness the exciting moment
as it happens.
Freedom from TV at home occurred through the new mobile TV service provided
by Vodafone. 3G subscribers to Vodafone Live! were offered access to 10 digital
TV channels via their handsets. Services on TV and mobile phones continue to
converge.
Through ground breaking technology, Huawei helped Vodafone Spain increase its
network performance by over 30% in total, paving the way for launch of the new
mobile TV service. Around the globe, Huawei is enabling many operators with similarly
innovative solutions to capture convergence business opportunities and to provide
consistently enhanced communication experiences for end users.
3G subscribers to Vodafone Live! were offered access to
10 digital TV channels via their handsets. Services on TV
and mobile phones continue to converge.
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CONTINUOUS INNOVATION BASED ON CUSTOMER NEEDS 10
CONTINUOUS INNOVATION BASED ON CUSTOMER NEEDS
People expect integrated multimedia information
services and consistent communication experiences
anywhere, anytime, at home, at office or on the road
regardless of the network they access.
Convergence
Consistent
communication
experience
for everyone
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CONTINUOUS INNOVATION BASED ON CUSTOMER NEEDS
Customer Demands
elecom networks, IT, digital media and consumer electronics are
evolving to offer more comprehensive and in-depth convergence.
To sustain growth, operators need to transform existing communication
networks into more flexible, open and affordable all-IP networks and, in
the process, achieve a convergence of network technologies to provide
end users with a commensurate communication experience.
Huawei Innovations
To help expedite evolution and ensure sustained commercial success,
Huawei has launched innovative solutions for network, technology and
service convergence.
Network Convergence: Pooling Value
Huawei leads the way in evolving every network layer to IP. The company
has now realized in-depth convergence at every level from access to
transport and core networks.
By way of example, Huawei IMS-based innovative ISE/TSE dual-engine
eliminates the borders between telecommunications and Internet, making
it possible for users and services in the two areas to converge.
Technology Convergence: Minimizing Operators’
Investment Risk
Huawei’s fourth generation base station platforms allow future convergence
of GSM, CDMA, UMTS, LTE and WiMAX technologies. For operators,
this resolves decision making and helps save considerable construction
and operating costs encountered when attempting to combine diverse
technological solutions.
Service Convergence: Capturing Market Opportunity and
Driving Revenue Growth
Huawei provides uniform FMC service solutions, offering operators richer
multimedia VAS to convert network advantages into revenue growth.
For example, Huawei’s Convergent Billing Solution allows for the flexible
combination and personalized marketing of all services. With a shorter time
to market, operators can more quickly gain critical market initiatives.
30%
Huawei helped Vodafone
Romania deploy a unified
2G/3G core network, with
TCO savings of 30%.
1 day
Huawei’s Convergent
Billing Solution enables
the operator to launch a
service package in a matter
of hours instead of the
previous months.
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CONTINUOUS INNOVATION BASED ON CUSTOMER NEEDS13
CONTINUOUS INNOVATION BASED ON CUSTOMER NEEDS
Hassan and his family were sitting together to enjoy TV programs. “It is great to have
so many choices. Now every one in our family is free to watch what they like.”
Hassan’s family is among hundreds of thousands in Morocco that benefit from
Morocco Telecom’s IPTV service. In the recent past, watching TV was considered a
luxury and choice was extremely limited. With IPTV, the cost has plunged by over
87% and a wide range of programs now cover sports, movie, entertainment, music
and more.
Through an all-service broadband network, Morocco Telecom allows people to
enjoy the convenience of added telephony, Internet surfing and IPTV over just one
telephone line.
Huawei’s Multi-Play solution supports Morocco Telecom’s new service and provides
a platform for speedy introduction of added services. In similar fashion, Huawei’s
innovative solutions are helping operators roll out omnipresent rich telecom services
all around the world.
People can enjoy the convenience of
fixed telephony, Internet surfing and IPTV over
one telephone line.
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CONTINUOUS INNOVATION BASED ON CUSTOMER NEEDS
Driven by information communication technologies,
profound changes have taken place in people’s
communication needs and habits: universally
users expect increasingly smoother and enriched
communications experiences.
All-IP Broadband
Omnipresent
rich telecom
services
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CONTINUOUS INNOVATION BASED ON CUSTOMER NEEDS
Customer Demands
nd-to-end all-IP is a major symbol of the broadband era. On this
backbone, operators will deploy networks and services from two aspects
to satisfy user needs: 3G/HSPA/LTE networks to support mobile broadband
services and fixed broadband networks to satisfy the demands for super
high-bandwidth services.
Huawei Innovations
Huawei has enabled end-to-end transformation of entire telecom networks
into all-IP, increasing the throughput of overall systems and boosting
operators’ flexible deployment of broadband services.
Mobile Broadband Solutions
Huawei’s 3G/LTE Solution enables operable mobile broadband networks,
paving the way for mobile Internet services and allowing operators to profit
from future-oriented competencies. The Femto cell home solution satisfies
enterprises’ and families’ demands for indoor broadband; the MBMS
mobile TV solution ensures lively mobile broadband service experiences
enhanced by high-quality images.
Huawei’s IPTime (IP Transport Infrastructure for Mobile Evolution) Solution
is an all-IP based transport solution for enhanced broadband experiences
and structural TCO reduction in 2G/3G mobile networks.
In addition, Huawei’s WiMAX solution is designed to meld with existing
CDMA, GSM, NGN and IMS systems, enabling cost-effective deployment
of mobile broadband networks and providing seamless and convergent
mobile broadband service experiences.
Fixed Broadband Solutions
Huawei’s IPBase (IP Broadband Architecture for Service Experience) Solution
is an all-IP broadband solution, which ensures uninterrupted service and
high quality of experience.
For IPBase, Huawei launched a T-bit optical access platform, a 160T multi-
chassis cluster router, and a T-bit OTN with 40G WDM. The capabilities of
the triple T-bit have built an end-to-end ultra broadband network.
Broadband Terminals
Keeping ahead of mobile and broadband trends, Huawei provides operators
with abundant fixed and mobile broadband terminal products. Supporting
a wide range of services, Huawei broadband terminals enable operators to