As Vice President for Huawei Middle East, Leo Xu is responsible for leading the regional solutions and marketing team to drive new telecoms business according to customers’ requirements, and promote Huawei’s advanced solutions with operators across the region. Leo joined Huawei in 2001 and has more than a decade of experience in the telecommunications industry.
Tell us about the current situation of telecom industry around the world and how it has been affected from the global economic turmoil in the last couple of years? What challenges have you faced and how Huawei has progressed in recent years.
Undoubtedly, in today’s world, one cannot stay unaffected by what happens around them. The financial crisis hit most of the world’s industries and businesses, and even today, many sectors are still recovering. With regards to the telecom industry, advances in technology are making huge contributions to our changing global society and economy. As a result, we have in fact seen growth in the consumer market, expansion in services, and in supporting networks and devices. Outdated networks are being transformed to introduce new services, so from a Huawei perspective, we don’t see the financial crisis having a significant impact on the telecommunication industry.
Huawei has seen steady growth these last few years thanks to our customers’ trust and confidence in our products and services. While continuously expanding in the emerging markets, we have consolidated and improved our market position in Europe and North America. We have made unprecedented growth in major areas such as telecom networks, enterprise, mobile handsets and other communication access devices and professional services. We are leading in mobile broadband, optical transmission, core networks and access technologies, while expanding our cooperation with the world’s leading telecom operators in the software domain.
In particular, we see broadband networks as a major catalyst for growth in both the telecom industry and in the global economic recovery. Governments are playing an important role here in making significant investments in telecom infrastructure that supports national competitiveness. We have put special emphases in this area and are developing solution based on cutting edge technologies in fixed and wireless domain. We are, for example, investing more than 50% of our human resources and over 10% of our revenue in R&D to ensure our long-term strategy and maintain our leading position in this arena.
Tell us about Huawei Pakistan and its achievements and contribution?
Huawei’s strong relationship with Pakistan goes back many decades. Huawei entered Pakistan in 1998 and has continued to invest in the Pakistani market since that time. In 1999, Huawei Technologies Pakistan (Pvt.) Ltd. was formally established and started to expand the telecom market. Today we have a good sized workforce of more than 800 staff of whom over 75% are local. We are providing services to all major telecomm operators, government and enterprises in Pakistan. We are not just a telecom infrastructure provider to our customers, but have established strategic partnerships with them to ensure that we cater for all of their requirements and provide end-to-end ICT solutions.
In June 2000, Huawei’s introduced our switching and optical network products in Pakistan, which represented our major breakthrough in the country. By 2002, Huawei became an important partner of PTCL, the largest telecom operator in the market in terms of high-end telecom products. Two years later in 2004, Huawei not only deployed CDMA, WLL, GSM and mobile IN for PTCL and Ufone, but also became the first vendor to introduce NGN Soft switch in Pakistan through a project for PTCL high-end tandem switches. In 2009, Huawei joined hands with PTCL to launch the world’s fastest CDMA broadband commercial network.
Since Huawei was already a trusted supplier to government and enterprises in Pakistan, it was a natural next step for the Huawei Enterprise Business, created in 2011, to make Pakistan a major focus for its expansion in the Middle East region. The emergence of cloud computing and the convergence of IT and communications technology provides unprecedented new opportunities for the Huawei Enterprise Business. Addressing the IT infrastructure and communications needs of industries including government, energy, smart grid, transport, finance and more, Huawei Enterprise Business aims to become Pakistan’s first choice solutions provider for building next-generation ICT infrastructures.
Apart from working in the provision of telecom services, we are very much committed to our corporate social responsibility in Pakistan by being at the forefront in knowledge and technology transfer. In 2002, Huawei donated telecom equipment worth USD $3 million to the University of Engineering and Technology Lahore to establish the Huawei – UET joint ICT R&D training center. We later expanded the lab with an additional USD $5.2 million investment. Up to now, Huawei has successfully trained more than 3,500 Pakistani engineers and students.
Huawei has also been there to help our Pakistani brothers and sisters in times of need. In October 2005 for example, Huawei donated USD $300,000 in cash to support re-build efforts in earthquake affected areas, while dispatching specialized support teams to these areas to ensure telecom facilities could assist in the disaster rescue. In 2010, during the worst flooding in the history of Pakistan, Huawei donated to the Prime Minister’s Flood Relief Fund with Huawei employees around the world running a concurrent donation drive to help the flood-stricken areas.
Who are your major clients in Pakistan and How Huawei is performing here?
In Pakistan, Huawei has achieved a high level of trust and satisfaction from all our customers. This is evident in our continued growth to date, as well as our preparation in launching advanced data networks in wireless and fixed domains in the future.
Huawei is Pakistan’s largest telecom infrastructure and solutions provider, as well as the only vendor to establish comprehensive cooperation with all the major operators in both public and private sectors. This position is attained by providing world class equipment and services, which does not mean just catering to their ever-increasing network and quality requirements, but also implementing these solutions in the most cost-effective way. We help reduce costs by deploying high-capacity equipment, simplifying and reducing the size of network elements, minimizing the need for power and maintenance, and so forth. These solutions are quite critical to enhancing network security, reducing transmission costs and providing growth capacity for telecom operators in Pakistan.
Huawei has also achieved some significant successes within the enterprise business in Pakistan, in the government and public utilities field in particular. We recently worked with the Higher Education Commission (HEC) Pakistan to redesign its national education broadband network, the Pakistan Education and Research Network (PERN), with a 10G high-speed connectivity backbone, and we also recently contributed to a safe city project in Islamabad.
How do you see Pakistani market in future? Which areas have potential?
Pakistan is a large country in terms of size and population, but most importantly in terms of potential. The country has for example, over 100 million mobile subscribers, and is still growing rapidly after the explosion of mobile communication in the last two decades. Data communication has also taken the lead over voice, and we see phenomenal growth potential in this area.
Internet and broadband usage in Pakistan has also soared in recent years, presenting huge demand for ICT services and equipment providers. Our experience in other markets shows that the introduction of broadband has contributed not just to the growth in the telecom industry, but to all walks of life. Statistics have shown for example, that a 10 percent increase of broadband penetration results in growth of over one percent of GDP. During our broadband road show in Islamabad in September, we demonstrated 3G, HSPA, LTE and other telecom solutions in which we received overwhelming responses from all attendees. This supports our assessment that in Pakistan there is huge demand in the coming years to provide data-based services for public and private sectors.
A thriving and diverse business community is also spurring demand for enterprise business solutions, with interest particularly high in the government, banking, energy, power, utilities and transportation sectors. Right now, the hot spots for interest in Huawei’s eEnterprise business solutions include Karachi; which as a center for commerce and manufacturing is fast establishing itself as a regional hub for business and trade, and Islamabad; a government center with far-reaching plans to modernize the country and attract further foreign investment.
Once again, government investments have been critical to ensuring that these demands are met and that quality of service to consumers remains at the highest level possible.
How do you compare Pakistan’s market with other countries?
As mentioned earlier, a strong ICT infrastructure has become a fundamental requirement for the modern society. The building and modernization of ICT infrastructure in any country brings a host of unique challenges and opportunities for that market. Pakistan is no different. Local customs, literacy rates, urban populations, mobile subscribers and income all have an impact on the telecom market of the country. The geography of Pakistan has further influenced the technologies applied for both fixed and mobile networks.
Pakistan is one of the countries whose telecom sector has been dramatically changed by regulatory reforms such as opening of boundaries for foreign direct investment (FDI), deregulations and privatization. Pakistan started its telecoms reforms by allowing private competition in value added services in the 1990s, followed by the opening of cellular and basic services for local area to private sector.
As a whole, public and private entities within Pakistan are incredibly eager to see deployment and growth of ICT –which is progressing fast. The government of Pakistan has outlined strong policies which have encouraged ICT investments in recent years, and a lot is being done to provide access for business and domestic consumers on a national level so that they can enjoy the benefits of technological advances.
What are the major issues telecom sectors of Pakistan is facing? Has telecom sector of Pakistan reached its saturation point?
Today’s economies are highly dependent on ICT infrastructure, and most of the governments in the world have initiated deployments of national broadband to align themselves for future demand. Pakistan is indeed transforming into a knowledge-based economy by promoting effective ICT projects through public and private sectors. Pakistan is not far behind in terms of capability and hunger to adopt, but the deployment of infrastructure often requires significant capital and human resources up front. These are challenges that we are continuing to address with our partners and regulators in Pakistan, and I can assure you that we are making steady progress in this direction.
Saturation has certainly not happened everywhere—particularly in bringing the latest global technologies to market. In terms of mobile users, Pakistan has crossed over the 100 million mark, which means almost 50% of the population has access to mobile yet internet and broadband areas have huge potentials for growth.
Telecom operators in Pakistan recognize the diverse geographic and social landscape of the country and how that impacts the kinds of technologies available to the population as a whole. From Huawei’s perspective, we are poised to answer the call for whatever customers demand through our end-to-end solutions which cater to a wide spectrum of ICT requirements.
What changes do you see in customer behaviors and market conditions in terms of buying power, competition and quality (globally)?
Customers today are far more demanding and require quality of service in all dimensions of the market, whether in quality of network, devices or customer service. Having a de-regulated marketplace where telecom operators are facing fierce competition has given consumers an advantage—having choices from a number of services providers. The term “churn rate” was never heard of a decade ago, while today operators and vendors are working harder than ever to earn the loyalty of their customers.
Another change in customer behavior comes from the sheer variety of services demanded by the public. As technology has developed, one has to cater to an increasingly segmented society. Some mobile users, for example, want the latest in video games and quality graphics. Others just look at the quality of voice service and whether they can clearly understand the keypad and user interface. Business user will be more interested in security, reliability and cost of the services. The list goes on and on.
The convergence and cloud computing era sees organizations across industries realizing they need to integrate IT investments into the overall business if they are to achieve their full potential of saving costs and increasing productivity. Cloud allows smaller businesses to access IT resources at a fraction of the cost and compete on a bigger scale, and is spurring economic growth in the Middle East region. Businesses in Pakistan are interested in enhancing their information security and using their IT infrastructure more efficiently, and the private cloud helps them do this and make the most of their resources.
Lastly, while we recognize that buying power may be increasing in some markets, due to competition one has to be agile in balancing the best services—at the best price—to support a viable business. We at Huawei pay close attention to the requirements of our customers to ensure that we meet this combination of service and price to create long-term value for the public.
What major changes have you seen in the telecom industry of the world in the last 5 years?
Over the last five years there have been drastic advancements in the telecom industry—both from a technical perspective as well as huge shifts in the way that individuals and enterprises gather, use and share information.
Operators are now competing more than ever in the bundling of voice, Internet, television services and contents. Revisiting copper networks and the deployment of fiber networks—particularly national broadband networks—has taken on new dimensions in every corner of the globe. In the wireless realm, the switch from analog to digital and now wireless Internet has changed the business model for many players in the industry. The handset business itself has been completely reinvented over the last few years with the advent of new smartphones, tablets and operating systems.
To meet the dynamic needs of the global market, we are continuing to focus on customer-centric innovation as a means for delivering better technologies, products, solutions and services.
Can you give a brief of growth in telecommunication and looking into future, which regions have growth potential in the next 5 years and why? Please name three.
If we look at the growth of the telecom industry—both from a consumer and infrastructure viewpoint—it has been immense from the 1980s to date, even with the economic downturn and a brief hiccup in the early years of the 21st century. From the start of wireless communication we have never looked back. The journey from TACS to GSM, 3G and LTE has been revolutionary. The voice and data services we enjoy today were never envisaged by many in the 19080s and 1990s. In terms of advances in technology and taste for these wonderful services, the growth had been exponential.
Huawei believes that growth will continue worldwide in the coming years. This will include the modernization of old networks to introduce new services, or expansions to improve capacity and quality. Growth potential in Africa, Latin America and East European regions will be particularly high, although there will also be considerable growth in Europe, North America and the Middle East—particularly in demand for data services.
Of all the products and services, how do you rank the best 3 products and best 3 services of Huawei which are high in demand?
Traditionally, Huawei has been a provider of telecom infrastructure and solutions for operators in wireless and fixed domains. Due to changes in market dynamics, we also now offer integrated ICT solutions for the telecom industry, including terminals and professional services. Our global operations are now divided into three core business groups – telecom networks, enterprise business, and devices. Today we are a leading end-to-end ICT solutions provider with a huge portfolio of products and services, some of the most successful including:
SingleRAN – One of our major and most successful innovations, SingleRAN sets the precedent in revolutionizing wireless networks worldwide. This is part of our pioneering end-to-end Single Strategy—an optimal combination to increase the efficiencies and maximize the values of operator assets across the board.
Virtual Desktop Infrastructure (VDI) – Huawei’s enterprise business has pioneered new innovations with regards to network infrastructure, fixed and wireless communication, data centers, and cloud computing solutions for global industry and enterprise customers. We introduced our latest Virtual Desktop Infrastructure (VDI) for business users on the move; a solution that we are both proud of and which has opened new horizons for operators and consumers alike to reduce costs and enjoy world-class services.
Devices – Huawei has made phenomenal progress in fixed, wireless and enterprise devices. So far in 2011 alone, we have shipped 120 million devices around the globe, and have seen strong demand for these products worldwide. Huawei’s smartphone range has proven especially successful in offering the latest technologies to users looking for long-term value.
Today, Huawei’s products and solutions have been deployed in over 140 countries serving more than one third of the world’s population.
What opportunities Huawei provide to young entrepreneurs of the telecom sector?
Working with local and regional partners, Huawei has developed a variety of programs across the globe to encourage and educate young people within the ICT industry.
Huawei continues to grow its “Telecom Seeds for the Future” program, enhancing communication skills in places like Malaysia, the Philippines, Australia, Indonesia and Bolivia. This involves donating telecommunication equipment, establishing training centers and providing internship opportunities – initiatives that are strongly supported and well-received by many countries.
Working with renowned operators such as Vodafone, Orange, Orascom, MTN, STC, Zain, Qtel and Etisalat, we have also gained valuable experience in developing and resourcing necessary tools, equipment, training material, and technical support required to deliver professional training programs to countries within the Middle East and Africa.
In Pakistan, the UET HUAWEI Joint Telecom Lab research and development training center has witnessed prolonged growth in providing students with experience related to the practical application of ICT solutions. To date, Huawei has successfully trained more than 3,500 local engineers and students.
Huawei is also committed to being a learning organization in itself, with an established Huawei University to facilitate a variety of training programs for both customers and employees—including a mentorship program which serves to help new employees to prepare for the industry.
What are you future expansion plans in terms of regions, technological areas and products/services?
Huawei will continue to be customer-centric in our global approach. This will involve extending our integrated advantages in telecom networks, global services and devices based around customer requirements. Moving forward, we are determined to providing products and solutions for the cloud, pipe and devices businesses within our ABC strategy: growing average revenue per user (ARPU), increasing bandwidth and reducing cost for operators.
In consolidating our cooperation with telecom operators, we also expect to double Huawei’s enterprise business in the whole region over the next one to two years, and see the Middle East as a whole holding significant potential for our growth. Our focus over the next few years will be to drive our enterprise business in the Middle East with a target of bringing on board 400 employees by the end of 2011.
Cloud computing, data centres, IT and communications technology convergence are all key areas in the enterprise business for Huawei this year. Organizations in the region are realising that integrating IT into the overall business makes the difference between successful and unsuccessful management of their company’s costs and direction, and this realization is spurring a demand for our products and solutions that we hope will help us achieve our ambitions for growth in the region.