Huawei has withdrawn as the main sponsor of the Canberra Raiders rugby league club amid a dramatic downsizing in Australia, which implemented the world’s first ban on the Chinese company selling 5G equipment.
Since the ban was announced in 2018 on national security grounds, Huawei has laid off about 1,000 of its 1,200 workers, ended A$100m ($74m) in research and development partnerships and disbanded its local board.
Huawei continues to sell mobile handsets and serve business customers but trade restrictions imposed by the US have forced the cancellation of some contracts, including a A$200m deal with Western Australia’s Public Transport Authority.
“Even after the Turnbull government banned us from 5G we managed to find the resources to continue the sponsorship but we just can’t financially support it any longer,” said Jeremy Mitchell, Huawei’s chief corporate affairs officer, when announcing the end of its decade-long sponsorship of the “Green Machine”. Although it was never announced how much Huawei was sponsoring the Canberra Raiders, local media estimated the deal was worth more than A$1m a year
Analysts said the scale of the restructuring in Australia would probably be repeated in other jurisdictions, which are implementing bans on Huawei selling next generation 5G technology.
“The ban on Huawei was a big blow to the company in Australia,” said Nigel Pugh, managing director of Venture Insights, a research firm.
“We are very likely to see similar effects to its business in the UK, potentially even more so, because Huawei is a big player in fixed broadband as well as mobile in Britain.”
Canberra’s decision to ban Huawei from providing 5G equipment cost the company valuable contracts with local carriers Vodafone and Optus, and has clouded the company’s ability to win new business.
Huawei Australia reported revenue of A$657m in 2019, down 10 per cent on the previous year. Pre-tax profits fell to A$33.8m, from A$38.7m.
Until recently Huawei said it would try to change the government’s position on 5G, even holding a series of nationwide public forums to communicate directly with the public. In April the company pledged to continue supporting the Raiders — a team located close to the Australian parliament and that counts many politicians among its fans.
But with no sign of a change in policy and diplomatic relations between Canberra and Beijing falling to their lowest point in a generation, Huawei appears to be making a phased withdrawal from Australia, said analysts.
Huawei has terminated its sponsorship of the Gold Coast Suns, an Australian Rules Football team, and ceased funding up to A$100m of R&D activity, including a partnership with James Cook University in Queensland.
The withdrawal of funding presents a big challenge to Huawei’s partners, which could struggle to identify a replacement sponsor during Australia’s first recession in almost 30 years.
In March the company disbanded its local board of directors, which had been chaired by John Lord, a former rear admiral in the Australian navy, and which initially included several retired politicians including Alexander Downer, a former Australian foreign minister.