Huawei

Huawei to sell Honor in $15.2 billion deal

10 November 2020 | Melanie Mingas

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Huawei is to spin off its Honor smartphone brand in a US$15.2 billion deal, paving the way for an IPO by 2023.

The government of Shenzhen and handset distributor Digital China are reported to be in line to buy.

Digital China Group Co Ltd is Honor’s main distributor and, under the terms of the deal, will become a “top-two shareholder of sold-off entity Honor Terminal Co Ltd with a near-15% stake”. Honor Terminal was incorporated in April and is fully owned by Huawei.

Breaking the story today, Reuters sources claimed Huawei needs to focus on high-end handsets and corporate-oriented business following US sanctions.

The sale will include “almost all” company assets, including the brand, R&D and supply chain management. Honor will retain “most” of its management team and 7,000-strong workforce, with an IPO planned by 2023.

The named parties in the deal have yet to provide comment on the recent developments.

Honor – which in addition to budget phones produces laptops, tablet computers, smart TVs and electronic accessories – recorded a H1 revenue increase of 13.1% year on year, with a net profit margin of 9.2%.

Honor-branded smartphones made up 26% of the 51.7 million handsets Huawei shipped in July-September, according Canalys and are particularly popular in Russia and Saudi Arabia.

Its corporate website states that in the first half of this year, HONOR ranked as the top smartphone brand in Russia, with a 25.9% market share for sales. Meanwhile in Saudi Arabia in Q1, Honor took fifth position for smartphone shipments and ranked number three in the mid- to -high-end smartphone category.