Huawei closing telecom equipment corporate sales division in Russia - paper

MOSCOW. Dec 19 (Interfax) - Chinese telecom equipment maker Huawei is closing its Enterprise Business Group division in Russia, which was responsible for supplying information and communication technology solutions for corporate customers in the country, national daily Kommersant reported on Monday, citing a market source.

A source close to Huawei confirmed that most of the company's employees will leave the division, which supplied products such as data storage systems and telecom equipment, but a nominal office will remain. "The company is prepared to return if active fighting in Ukraine ends," the paper's source said.

Huawei will maintain its R&D centers in Moscow, St. Petersburg, Nizhny Novgorod and Novosibirsk, which are developing 5G technology, speech processing and generating and computer vision technology, augmented and virtual reality systems, and machine learning, among other things, the paper said. Vedomosti reported in November that Huawei was splitting Enterprise Business Group between CIS countries and Russia.

Huawei's decision is due to the risks of secondary sanctions, since equipment can be used in the state sector, the paper reported an industry source as saying. Products shipped into Russia through parallel imports could have restrictions on how the software works in the region, so Huawei's presence on the ICT solutions market "will gradually shrink," the source said.

The company is maintaining its consumer electronics (smartphones, laptops, etc.) and AppGallery mobile services business in Russia, the source added. Huawei declined to comment.

Tekhkompaniya Huawei LLC, which is owned by Netherlands-based Huawei Technologies, closed 2021 with a net profit of 3.9 billion rubles on revenue of 112 billion rubles, the SPARK-Interfax system showed. The Russian market accounted for no more than 2% of the group's total revenue.

After the start of the military operation in Ukraine, most major vendors of ICT solutions officially suspended sales in Russia. Huawei's management did not make any official statements, but also suspended shipments. As a result, sales on the Russian market for data storage systems fell 30-50% and prices rose by as much as 50%.