Rajeev Weimin Yao, Vice-president, Huawei

In February this year, the Supreme Court cancelled 122 licences of most new operators like Uninor, Sistema Shyam Teleservices and Etisalat DB terming them illegal. These licences had been issued in 2008 under the then Telecom Minister A Raja. The apex court had asked the government to auction the spectrum by August 31 as the licences are set to expire in September. Operators will have to participate in a fresh round of auctions and bid for airwaves, which puts in jeopardy investments made by these players. Asked about the targeted revenue for 2012-13, Liqun declined to comment but added, “We are in discussion with all players. This year, we are looking at more than 50 per cent of all LTE contracts coming to us”. The company has already deployed 4G LTE network for telecom major Bharti Airtel in Bangalore. Huawei, which has a low single-digit market share in the mobile phones segment in the country, is also looking at ramping up its presence in the category. “In three-five years, we want to become one of the top 3-4 players in the Android smartphone space,” Sykes said. Globally, it is targeting sales of 60 million mobile phones this year and is hopeful that its ‘Ascend P1’ (launched at the Mobile World Congress in Barcelona) will make waves in India. An interesting fact to know about the company is that in its 22- year-old history, it has never tapped the capital markets to fund growth. Nor does it plan to do so in future. Huawei has a unique shareholding pattern – all of its shares are held by its employees and there are no major shareholders. Even the founder of the company -- Ren Zhengfei – who happens to be the largest shareholder, owns just 1.4 per cent of the shares. “Every employee who is a Chinese national and has spent more than two years in Huawei has claims to some ownership in the company, through stock holding,” Sykes said adding that the shares can’t however be traded as the stock is not listed. Huawei had introduced the employee stock option programme for its Chinese employees in 1990 more out of a need to bring in responsibility and a sense of ownership among staff. With 140,000 e m p l oy e e s now and a presence in 140 countries, almost 60,000 are partowners. With more e m p l oy e e s joining Huawei every year, a new set of shares are issued each year and those held by staff leaving are reissued. The quantity of stock issued depends on skills and experience. When an employee leaves, he has to sell his shares back to the company unless the person is too senior, having spent 10-15 years working for it. Sykes said the company is now toying with the idea of opening up the scheme to non-Chinese nationals too, including himself. “Our founder has always been of the opinion that all employees should act as owners and hence we all are shareholders. If the company makes good profit, we get higher dividends and if it doesn’t, our dividend payout is less,” Huawei India Vice President (Corporate Affairs) Rajiv Weimin Yao said. While the system comes with its advantages, it has drawbacks too. “Because of this complex structure of shareholding, it is very difficult for the company to get listed and raise money from the markets as this will require a lot of exercise in terms of restructuring the shareholding pattern,” Sykes said. With targeted revenues of USD 100 billion by 2020 and a growth rate of over 20 per cent annually, it certainly presents a good opportunity for investment bankers.