UK-listed telecoms and connectivity testing equipment manufacturer Spirent Communications (SPT) looks most exposed to a ban on business with Chinese technology infrastructure firm Huawei.

Huawei has been blacklisted by US President Trump in the latest skirmish over trade with China, with Google cutting ties.


Spirent supplies test equipment to Huawei, with the Chinese company estimated to account for around 5% to 6% of the $477m revenue Spirent earned last year. That would put something like £20m to £22m of future revenue in doubt, according to our back of notebook calculations.


There are a couple of points here. Spirent is valued at £976m and as a FTSE 250 member, is reasonably significant to UK investors. It is the biggest constituent of the UK’s now threadbare technology hardware sector.

But more importantly, roughly 55% of revenues come from the US where Huawei has been blackballed during a period of significant investment in next generation 5G mobile networks.

The bat back is that Spirent has substantial global revenue streams, across Asia, the Middle East, Africa and Europe. The company was certainly upbeat enough when it posted a first quarter update at the start of May, talking up 'positive momentum' and confirming business in line with expectations.

‘We  believe the rest of Spirent's business is seeing strong demand currently, with a healthy longer term outlook underpinned by the widening adoption of its Lifecycle Service Assurance products,’ says Liberum.

For now investors appear to agree. Spirent shares have actually nudged modestly higher since closing at 158.8p at the end of last week, to 160.8p now.

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Issue Date: 21 May 2019