Vodafone shares slide as operator ‘calculates cost’ of Huawei ban
Vodafone shares dipped more than five per cent this morning as the telecoms firm said it was still “calculating the cost” of removing Huawei kit from its 5G network following a government ban on the Chinese vendor.
Vodafone chief executive Nick Read told reporters this morning the firm was “clearly disappointed” in the government’s decision last week to U-turn on a deal with Huawei to build part of the UK’s 5G infrastructure over national security concerns.
Vodafone, BT and Three, which have all launched 5G using Huawei kit, have warned that the government’s decision will cost them billions.
However, Read today said Vodafone did not currently have a ballpark figure for the cost, “because frankly, we just got the new rules and therefore we have to work through the impact”.
Shares dipped as much as 5.3 per cent in early trading, before improving slightly to 4.3 per cent down to 123.3p at midday.
Earlier this month, Vodafone UK’s head of networks, Andrea Dona, said the firm would need a “sensible time scale” of at least five years to transition its network away from dependence on Huawei, in a move that would cost the company “single figure billions”.
Speaking today, Read added that the operator was in talks with the government to mitigate the cost of ripping out Huawei technology from its UK network.
“It does cost the industry and the industry has a very low return on capital… We are very much engaged with the government on a set of concrete solutions on how to recover that cost,” said the Vodafone chief.
Read said the Huawei ban should be seen as “very much a UK decision”, which should not automatically be extrapolated to Vodafone’s use of Huawei technology across Europe.
“I think you should view it in the context of the UK’s unique geopolitical position, especially as a member of Five Eyes [and its] relationship with the US. I would not automatically extrapolate this to Europe. Europe is going through its own process of review with the 5G toolkit.”
It comes as the British telecoms firm this morning reported a 1.4 per cent dip in revenue to €10.5bn over the three months to 30 June, as coronavirus lockdowns around the world dented its service revenue.
The company also said lower prepaid SIM sales to tourists and migrant workers dented earnings, after Vodafone saw roaming and visitor revenue in Europe plunge 70 per cent over the quarter.
Before the Open: Get the jump on the markets with our early morning newsletter