Huawei plans to sell the Honor brand for $ 15 billion

Reuters reported that Huawei plans to sell its Honer-branded smartphone unit in a deal worth 100 billion yuan ($ 15.2 billion) to a consortium led by Digital China, the mobile phone distributor, and the (Shenzhen) government.

The plan comes at a time when the United States imposes restrictions on Huawei imports that prevent it from focusing on advanced phones and business-oriented companies.

This suggests that there is little expectation of a rapid change in the US perception of Huawei as a security risk after the change in the US administration.

The cash sales process includes nearly all assets, including branding, research and development capabilities, and supply chain management.

Digital China, the main distributor of Honor phones, is set to become the largest shareholder in the wholly sold entity, with a stake close to 15 percent.

Digital China, which also engages Huawei in businesses such as cloud computing, plans to fund the bulk of the deal with bank loans.

There are at least three investment companies that will join the deal, which are backed by the government of Shenzhen, the financial and technology hub, with each owning between 10 percent and 15 percent.

After the sale, Honor plans to retain most of its management team and workforce of more than 7,000 workers, with it going public within three years.

Huawei established the Honer brand in 2013, so that the brand mostly operates independently, and analysts said: The divestment means that Honer is no longer subject to US Huawei sanctions.

Honor sells smartphones through its own sites and external retailers in China, where it competes with Xiaomi, Oppo and Vivo in the market for low-end phones, and sells its phones in Southeast Asia and Europe.

Honor-branded smartphones made up 26 percent of the 51.7 million phones Huawei shipped in July and September.

The brand’s products also include laptops, tablets, smart TVs and electronic accessories.

Honer made a net profit of about 6 billion yuan on revenue of about 90 billion yuan last year.

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