Huawei reportedly agrees to sell Honor for £11.5 billion

The front and back of an Honor smartphone

Huawei is reportedly planning to sell off its Honor smartphone business unit to a consortium led by distributor Digital China and the Shenzhen government in a deal worth 100 billion yuan (£11.5 billion).

The news comes weeks after rumours of the sale started circulating, with Reuters estimating the deal at up to 25 billion yuan (£2.9 billion). However, new reports claim that the transaction will bring Huawei three times as much profit.

Reuters reported, citing people with knowledge of the matter, that the sale will be all-cash and will include almost all Honor assets including brand, research & development capabilities, as well as supply chain management.

One source told the publication that Huawei might announce the acquisition at the end of this week.

According to two sources, Honor’s main distributor and Huawei’s cloud computing partner, Digital China Group, will become a top-two shareholder with a stake of around 15%, following talks conducted with Huawei last month.

Digital China is expected to be joined by at least three investment firms backed by the government of Shenzhen, where Huawei is headquartered, with each owning 10% to 15%.

Following the sale, Honor is expected to retain most of its management team and 7,000-plus employees. Sources also believe that the unit will go public within the next three years.

Meanwhile, with its budget-smartphone unit sold off, Huawei will reportedly focus on offering higher-end devices tailored to corporate clients. Out of Huawei’s 70-80 billion yuan revenue in 2019, Honor was only responsible for less than 5 billion yuan in net profit.

The move to sell the business unit could also be influenced by the ongoing trade war with the United States, with Huawei having been hit with sanctions by the Trump administration. One of the sources told Reuters that the decision to sell off Honor signifies little expectation for any swift change in the US perception of Huawei as a security risk, despite President Donald Trump losing his bid for reelection.

IT Pro has reached out to Huawei for comment but has not received a response at the time of publication.

Sabina Weston

Having only graduated from City University in 2019, Sabina has already demonstrated her abilities as a keen writer and effective journalist. Currently a content writer for Drapers, Sabina spent a number of years writing for ITPro, specialising in networking and telecommunications, as well as charting the efforts of technology companies to improve their inclusion and diversity strategies, a topic close to her heart.

Sabina has also held a number of editorial roles at Harper's Bazaar, Cube Collective, and HighClouds.