Telefonica Deutschland has tapped Huawei to build its 5G network in Germany, despite concerns that the Chinese telecoms firm could pose a threat to national security.
Germany’s second-largest mobile company today said it will slash its dividend almost 40 per cent as it prepares to pump money into the new network, which will also use kit made by Nokia.
Shares in Telefonica Deutschland dropped roughly 1.3 per cent following the announcement.
The move comes despite fierce debate in Germany over whether Huawei should be allowed to participate in key national infrastructure amid warnings from the US that its equipment could be used for spying by authorities in Beijing.
Chancellor Angela Merkel last month faced a backlash from members of her own party over her decision not to implement an outright ban on the Chinese tech firm.
While calls to blacklist Huawei have since died down, the country is yet to finalise security rules over telecoms suppliers.
“We hope that this window of uncertainty will be as short as possible – we don’t yet have certification for any of our vendors,” Telefonica Deutschland chief executive Markus Haas told reporters.
Deutsche Telekom and Vodafone – Germany’s other two networks – are existing customers of Huawei, but are yet to confirm if they will use the company’s kit for 5G.
The move is a welcome boost for Huawei, which has always denied allegations of espionage and is furiously fighting a crackdown led by the US.
Telefonica, which is the parent company of O2, has used Huawei equipment in its UK 5G trials, but does plans to use Nokia and Ericsson as its primary suppliers.
The company said it expected to have 5G up and running in Berlin, Hamburg, Munich, Cologne and Frankfurt by the end of 2021.
In the UK, the government is yet to issue a final verdict on whether Huawei will be banned from next-generation telecoms networks. However, EE, Vodafone and Three have all launched their 5G networks using some Huawei kit.