Nov 10, 2020

Demand for Chinese smartphones drops 14.3% in Q3 2020

APAC
Smartphones
covid-19
Joanna England
3 min
Reports cite soft demands, supply constraints and product launch delays due to COVID-19 as causes of the slowdown
Reports cite soft demands, supply constraints and product launch delays due to COVID-19 as causes of the slowdown...

China’s smartphone industry took a hit recently as the IDC Worldwide Quarterly Phone Tracker revealed a 14.3% drop in shipments in the third quarter of 2020.

The market research body, which collects data on mobile phone and smartphone markets for handset vendors, software developers and service providers, said the drop was caused by multiple factors, including supply constraints, soft demand, COVID-19 financial fallout and delayed product launches.

Huawei losses

China’s biggest mobile phone manufacturer, Huawei, which has a 56% market share of the Chinese smartphone market according to IDC studies, saw its shipments fall by 15.5%. The multinational technology company which is headquartered in Shenzhen has experienced several losses in recent months. These began with POTUS Donald Trump signing an executive order in May 2019, preventing US companies like Google from partnering with Huawei following security concerns. 

Although the order will be in place until May 2021, Huawei has been able to obtain temporary licenses to carry out work with US companies. Huawei also created its unique mobile software called Huawei Mobile Services. But according to reports by the global research and advisory firm Gartner, the multinational will face challenges in trying to branch out internationally.

Anshul Gupta, a senior research analyst at Gartner, says, "Huawei will have a challenging year. It has developed the Huawei Mobile Service (HMS) ecosystem, but with the lack of popular Google apps and Google Play Store, Huawei is unlikely to attract new smartphone buyers in international markets."

China’s smartphone company sales, in general, dropped by 20.2% across the board for that term, with Huawei losing 27.2% in the first quarter of 2020, according to Gartner.

Market leaders

However, China’s mobile phone companies, which are predicted to continue leading the 5G market, collectively shipped 49.7 million handsets in 2020Q3 alone. According to IDC’s data, Huawei is still only second to Samsung in the global smartphone market, beating Apple, Xiaomi, and Oppo. 

Gupta explained, “Huawei put in place an aggressive product introduction and sales promotion in China in particular and benefited from the strong support of communications services providers for its 5G smartphones.”

Budget smartphones

Oppo, China’s second-biggest smartphone manufacturer saw sales fall by 14.2%, while vivo, China's third-biggest provider, experienced a drop of 16.9%. However, vivo has recently specialised in different consumer segments and recorded fewer losses in quarter 3 than in previous periods. 

The fall in sales globally in smartphones is in part due to the COVID-19 pandemic, which has led to lower disposable income among populations. However, many mobile manufacturers have noted a decline in market interest in high-end smartphones, with sales in budget handsets rising.

Apple sold 38 million smartphones in the second quarter of 2020, a loss of just 0.4% on previous quarters by capitalising on the demand for budget phones with the iPhone SE. 

Annette Zimmermann, research vice president at Gartner, commented, “Apple’s iPhone sales fared better in the quarter than most smartphone vendors in the market and also grew sales quarter-over-quarter.”

She added, “The improved business environment in China helped Apple achieve growth in the country. In addition, the introduction of the new iPhone SE encouraged users of older phones upgrade their smartphones.”

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Jul 19, 2021

Telstra in talks to buy Digicel Pacific in Australian deal

Telstra
DigicelPacific
Telecommunications
Finance
2 min
Telstra is looking to purchase the Pacific operations of the telecommunications firm Digicel Group in partnership with the Australian government

Telstra has announced today that it is in talks with the Australian government as it looks to purchase the Pacific operations of the Jamaican telecommunications company, Digicel Group. The move is considered to be politically motivated in an attempt to block China’s influence in the region. 

According to Telstra, the majority of bids for Digicel would be financed by the Australian government. Digicel is currently the largest mobile phone carrier in the Pacific and has operations in Fiji, Papua New Guinea, Samoa, Tahiti, and Vanuatu. 

While no specific financial details were provided, Australian media has reported that, if secured, the deal would be worth about US$1.5bn (AU$2bn) with the Australian government paying around US$1.1bn (AU$1.5bn).

The media claims that equity will be split after debt and Telstra will acquire up to 30% of the company.

Chinese sale a “cause for concern” due to competition with U.S allies 

Selling Digicel to a Chinese company would be a “cause for concern” for the Australian government due to strategic competition between U.S allies and China in the Pacific region. Jonathan Pryke, Director, Pacific Islands Program at the Lowy Institute, a Sydney-based think tank, explained: "The Australian government is trying to achieve a few things at once. Digicel is the primary player in the Pacific and Australia sees it as a strategic asset that they can't allow to fall into the hands of China. They are keen to get Australian business back into the Pacific and they've come to the realisation that they are going to have to underwrite”.

A deal would also mean that Digicel would underwrite its future revenue forecasts for the next three years, according to the Sydney Morning Herald. 

Undersea cables 

As a company with a large market share in Papua New Guinea, Digicel uses a submarine cable from Sydney constructed with funding from the Australian government to expand data services there.

Built in 2018, the 4,700-km (2,900-mile) Coral Sea cable was largely funded by the government to head off initial agreements between Papua New Guinea and the Solomon Islands for Chinese telecoms company Huawei to lay it. 

Australia, in partnership with the United States and Japan, is also financing an undersea optic fibre cable for Palau, while Nauru, a small country in Northeast Australia, is planning to construct an undersea cable to connect an Australian network. The country rejected a Chinese proposal to lay the cable.

 

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