Tuesday 14 July 2020 3:16 pm

Rival firms prepare to scoop up Huawei market share after government ban

Rival telecoms firms welcomed the government’s announcement today that the UK will ban new Huawei products from its 5G infrastructure from next year, in a move that could signal a “gold rush” as alternative vendors scramble to scoop up Huawei’s market share in the UK.

Speaking in the House of Commons today, culture secretary Oliver Dowden also announced a 2027 deadline for all existing Huawei technology to be stripped from Britain’s mobile networks in a significant U-turn for the UK.

Read more: BT warns of outages if UK bans Huawei too fast

After months of deliberation Prime Minister Boris Johnson today bowed to mounting pressure from a potential Tory revolt and fresh US sanctions that made the Chinese vendor’s position in the UK more precarious.

The US has repeatedly warned that Huawei technology could be used by Beijing for state spying. Huawei strongly denies the claims and insists it is a private company free from state interference.

Rival suppliers of 5G equipment, including Nokia and Ericsson, will likely benefit from a spike in demand as operators seek to replace Huawei equipment with government-approved alternatives. 

Finnish telecoms firm Nokia used the government’s announcement today to shore up its position as a viable alternative to Huawei technology and capitalise on the market vacuum left by the Chinese telecoms giant.

Nokia chief executive Cormac Whelan said: “Nokia has installed in excess of 5m base stations for mobile networks worldwide, and has a global manufacturing footprint with production in 31 locations. 

“We have the capacity and expertise to replace all of the Huawei equipment in the UK’s networks at scale and speed, and are ready to step up to support the implementation of the UK government decision with minimal impact on the people using our customers’ networks.”

Nokia, which has run operations in the UK for more than three decades, is already present in every major UK network. The Finnish firm has already supported the UK rollout of 5G networks with O2 and 3UK, on top of the deployment of fibre for Openreach.

Swedish telecoms giant Ericsson also welcomed the government’s decision to ban Huawei equipment from the UK, adding that the move stubbed out “uncertainty” surrounding the UK’s 5G plans.  

Arun Bansal, president of Ericsson in Europe and Latin America, said: “Today’s decision removes the uncertainty that was slowing down investment decisions around the deployment of 5G in the UK. 

“It is now time for the industry to come together and start delivering on the promise of creating a world-leading 5G network for the people, businesses and economy of the UK. Ericsson has the technology, experience and supply chain capacity to help accomplish this, and we stand ready to work with the UK operators to meet their timetable, with no disruption to customers.”

Ericsson has been marking its territory on the UK 5G scene after signing a deal with O2 last October to develop part of the British company’s 5G infrastructure. The Swedish-based firm has counted for nine out of ten major vendor swaps in the last few years, after its equipment was found to be the most 5G-compatible. 

Meanwhile, UK vendors BT and Vodafone are both set to be hit with heavy fallouts from the Huawei ban.

Huawei has supplied BT since 2003, and the telecoms firm is heavily dependent on technology made by the Chinese vendor for its 2G, 4G and 5G networks. 

Chief executive Philip Jansen yesterday warned that it would be “impossible” to remove Huawei from the whole of the UK’s telecoms infrastructure before 2030, and cautioned there may be wide-scale network blackouts if BT is forced to strip Huawei’s 5G kit without sufficient warning.

Vodafone last week added it would cost the British mobile firm “single-figure billions” if it was made to switch Huawei telecoms kit for another vendor’s, and said that it would need at least five years to phase out existing Huawei technology.

A spokesperson told City A.M that “Vodafone is studying today’s announcement by the UK government.”

“We acknowledge the government’s understanding of the complexity of this issue and the desire to minimise disruption to consumers, businesses and public services through an adequate timeframe for implementation,” the spokesperson added.

“Obviously we are disappointed because this decision — as the government has highlighted today — will add delay to the roll out of 5G in the UK and will result in additional costs for the industry.”

Vodafone added that it will work with the government “to address the implications of this decision”, including potential impacts to the firm’s equipment costs.

Guillermo Pedraja, head of 5G at NTT DATA UK said: “Today’s announcement marks a significant sea change for the UK telco market. Whilst disruptive, businesses will likely welcome the long timeline to remove Huawei equipment from UK networks, avoiding some of the huge costs or outages predicted by industry experts.”

Pedraja warned that forcing networks to strip Huawei equipment from their infrastructure “risks a drop in quality and increased equipment prices” that could see a ripple effect in price tags for UK customers.

“We need to, therefore, see coordinated action from governments around the world to support viable, cost-effective alternatives to Huawei, if 5G is to reach its full potential as a transformative technology for businesses,” he added.

Huawei shunned the move as “politicised”, adding that the decision would hamper the PM’s plans to level up rural Britain and have full-fibre “gigabit broadband sprouting in every home” by the end of 2025. 

Ed Brewster, a spokesperson for Huawei UK, said: “This disappointing decision is bad news for anyone in the UK with a mobile phone. It threatens to move Britain into the digital slow lane, push up bills and deepen the digital divide. 

“Instead of ‘levelling up’ the government is levelling down and we urge them to reconsider. We remain confident that the new US restrictions would not have affected the resilience or security of the products we supply to the UK.

Read more: Former BP boss Lord Browne to step down as Huawei UK chair

“Regrettably our future in the UK has become politicised, this is about US trade policy and not security. Over the past 20 years, Huawei has focused on building a better connected UK. As a responsible business, we will continue to support our customers as we have always done.”

Huawei added that it will launch a review of the government’s decision and the future of the Chinese telecoms firm in Britain. 

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