Spirent benefits from China's 3G rollout and solid economy

A 3G exhibit was recently on display at Shenyang Science Hall in Shenyang, Liaoning province. Multinational telecommunications provider Spirent Communications eyes 3G service in China as its new growth engine. CFP

China's rollout of 3G services earlier this year might not have given an immediate boost to its three telecom carriers, but it quickly benefited equipment vendors and service providers.

Great Britain's Spirent Communications, a leader among network, device and services testing providers, is one of those beneficiaries.

China, and in a larger sense Asia Pacific, is becoming an increasingly important growth engine for the London-listed company, Spirent CEO Bill Burns said.

"While we have seen a marked pullback in telecom spending in developed markets, especially in the United States and Europe, the market is still growing robustly in China and other emerging countries," Burns said.

China's telecom industry reported 1.22 trillion yuan in revenues in the first half of this year, up 11.8 percent from a year earlier, according to the Ministry of Industry and Information Technology (MIIT).

At the same time, the telecom equipment sector chalked up 13.9 billion yuan in profits, up 35 percent from a year earlier, the Ministry figures showed.

This is in stark contrast to the situation in developed markets hit hard by the global economic recession.

Resilient economy

Burns said the resilient Chinese economy, which grew 7.1 percent in the first half, and the rollout of 3G services earlier this year will have a positive effect on Spirent.

The country's three telecom carriers are expected to spend 170 billion yuan alone this year in building or upgrading their networks, according to MIIT, the telecom industry regulator.

The network construction boom, Burns said, would create significant demand for its testing services.

The proportion of Spirent's revenues from the Asia Pacific region increased from 28 percent in 2008 to 33 percent in the first half of this year, Burns said, attributing the upward shift to a strong performance in China.

"The strong growth momentum in Asia Pacific will continue, and China will become even more important in the process," the CEO said.

But Burns did not disclose how big the Chinese market is for Spirent, citing company policy.

Global sales

Globally, Spirent's sales revenues climbed 15 percent in the first half of this year from a year earlier, while its operating profits edged up 14 percent at the same time, according to its financial report.

Its strong performance, Burns said, is the result of a combination of factors such as its broad product portfolio, the investments it made in new technology and its global presence.

The network and device-testing service provider, Burns said, would continue to make investments in China in areas such as team development, customer service and research and development (R&D) capacity.

Spirent will further expand the capacity at its Beijing R&D center "to tap into the deep pool of talents in the country", Burns said.

"China boasts the world's top science and engineering talents both in depth and breadth," Burns said.

But he admitted the biggest challenge is "how to recruit and retain the best talents", as competition in the field is fierce.

The Beijing center will conduct product adjustment and localization work, and also will develop products for global markets, the CEO said.

"We have expanded and will continue to expand our R&D team at the center to leverage local talent and engineering skills while being able to better support customers in China," he said.

Spirent hopes to help Chinese customers not just be successful players, but become global players in the telecom industry, he said, citing the examples of Huawei and ZTE.

In addition to serving the country's three telecom carriers, Spirent also provides its services to telecom equipment vendors such as Huawei and ZTE.

The British company recently was awarded a deal from China Telecom to provide test systems for parametric radio testing, signaling conformance testing, data performance testing and Location-Based Services testing.

China Telecom will use the Spirent C2K-ATS system to test mobile devices for compliance to industry standards and for application service quality, according to the agreement.

(China Daily 09/14/2009 page5)