NZ boss responds as Huawei Australia hit by mass layoffs

Huawei NZ's office in central Auckland. Photo / Chris Keall

Huawei Australia laying off 100 staff, and says it will be forced to shed more than half of its total workforce of 700 - 80 per cent of whom are locals.

In an open letter to the Australian Mobile Telecommunications Association, the Chinese giant said the number of redundancies could grow to over 400 in the next two to five years if the company continues to be banned from Australian telco's 5G upgrades.

But on this side of the Tasman, Huawei NZ deputy CEO Andrew Bowater says there will be no mass round of redundancies.

"We've dropped below 150 staff now but we breathe in and out depending on what's going on. So we normally sit between 135 to 160. There has been a bit of attrition and at the moment we haven't been replacing everybody - but we're certainly not in the zone of Australia," Bowater told the Herald.

Huawei's key customers in NZ include Ultrafast Fibre, Spark and 2degrees, but Bowater noted his company also does fixed-line work for Vodafone NZ (which is pursuing its 5G mobile upgrade with Nokia Networks).

The deputy CEO said, "The reality is that true 5G is years away." In the meantime there was a big pipeline of work to extract more value from today's 4G networks buy upgrading them to "4.9G" technology.

Huawei should not attempt "to leverage their commercial interest and commercial advantage by heavying the government," GCSB Minister Andrew Little said after receiving a letter from the Chinese giant.

Bowater also said that Huawei's consumer business is relatively stronger here than in Australia. He said there was "significant impact" on smartphone sales after the US put Huawei on an export blacklist - which did not threaten current models, but meant future handsets could not use software from Android-maker Google, Google's app store, or hardware from current American component suppliers such as Intel.

But, while not detailing any figures, Bowater says Huawei's phone sales have now bounced right back, further reinforcing its local position.

"We have no intention of leaving the market. We have contracts in place for the next seven or so years - so we're in a slightly different position from Australia," he said.

A July letter from Huawei to GCSB Minister Andrew Little, Communications Minister Kris Faafoi and GCSB Director-General Andrew Hampton, leaked to NewstalkZB, included the line:

"If Huawei New Zealand is excluded from supplying 5G equipment, this would have a significant effect on Huawei New Zealand's revenue, to the point where there is a real risk that Huawei New Zealand may not be able to continue to operate in the New Zealand market."

Bowater complained that statement had been taken out of context.

"That was not a threat. And it was one line out of a 40-page letter. It was a very factual, technical letter," he said.

However, Little - who had the benefit of seeing the whole document - did describe it as a threat.

On August 13, the day after the letter was leaked, he told RNZ, "It's not uncommon - you get threats like that … but the way [Huawei] get to work out a place for them and enhance their commercial interest is to work with their client, in this case Spark," Little said. "Not to try to leverage their commercial interest and commercial advantage by heavying the government."

With the benefit of hindsight, did Bowater think the letter had backfired?

The deputy CEO still thought it was the only way for his company to get its points across to a government that was refusing to engage with it directly.

Little has said repeatedly that the approval of network upgrades must be left to the GCSB in a politically neutral process.

Bowater said Spark's 5G application was confined to a narrow project - allowing 5G around the America's Cup,

"And what we're saying is the implications of that decision are much bigger than just that project, so it is appropriate to have communication outside that project."

He added, "It's been very frustrating that they [the government and the GCSB] have been willing to engage with the media about us but now with us. It would be nice to have some direct engagement. And we're disappointed we haven't had that so far. "

"If Spark had [5G] spectrum, they could launch with one of our competitors now. It's not us that's the hold up," Huawei NZ deputy CEO Andrew Bowater says. Photo / Supplied

Last week, Spark chief executive Jolie Hodson recently told the Herald that her company will select its initial 5G partners soon as its gears up to meet its target July 2, 2020 launch date for its first 5G service - a date that now looms larger since Vodafone sprung the news it would go live with 5G in four cities in December.

Spark spokesman Andrew Pirie later confirmed that Spark has not re-submitted a 5G proposal that includes Huawei - all but confirming that Huawei will lose out to Spark's other mobile partners (Sweden's Ericsson and US company Cisco) with the telco's first wave of upgrades.

Bowater maintained he was not disappointed that nine months on from Spark revealing the GCSB's decision, the telco has yet to re-submit, despite Huawei putting several compromises on the table.

"We've been working with them very closely but you've got to re-submit at the right time and get everything right and not leave any room for error," Bowater said.

"But, yes, time's moving on and I think Vodafone's announcement has put pressure on us - Spark's probably going to have to get a move on."

But the Huawei executive also reiterated that his company is playing the long-game, and that the multi-year span of 5G upgrades gave it ample time for a comeback.

At Spark's full-year result, Hodson said it was the wait for a government spectrum auction - currently subject to an indeterminate delay over a Treaty claim and other issues - that was the holdup, not Huawei.

And Bowater seized on that point today. Vodafone NZ could stage a limited 5G launch in December because it already had some of the required spectrum in its pocket.

"If Spark had [5G] spectrum, they could launch with one of our competitors now. It's not us that's the hold up," Bowater said.