Vodafone will spend €200m to rip Huawei from core networks
Vodafone said the government’s decision to leave Huawei out of the core of the UK’s 5G network would cost the operator €200m (£169m) as it revealed third quarter results today.
The mobile operator welcomed Boris Johnson’s “facts-based” decision to keep Huawei at arm’s length and vowed to remove it from its own core.
Chief executive Nick Read said the impact on Vodafone’s UK base was negligible, but the operator will spend €200m ripping it out of its core networks across Europe.
The process will take five years to alleviate the impact on Vodafone’s userbase.
“We felt it was time to take Huawei out of the core. It takes time to take equipment out and to do a swap without disrupting customers,” Read told media today.
“There are a few sites we need to address [in the UK] but I wouldn’t call it material in any way.”
Rival BT last week admitted the government’s Huawei restriction would cost it £500m as it prepares to lay the UK’s 5G network.
Vodafone hailed an €800m hike in group revenue to €11.8bn in the three months to the end of December following its $22bn (£17bn) acquisition of Liberty Global’s assets.
Europe drags on Vodafone’s organic growth
Meanwhile organic service revenue rose 0.8 per cent, up marginally on the previous quarter’s rate.
However, organic service revenue slipped 1.4 per cent in Europe compared to a 9.1 per cent rise in the rest of the world. That is a second decline in Europe after an identical drop in the second quarter.
Spain and Italy dragged down Europe’s performance. Spain declined 6.5 per cent and Italy shrank five per cent, more than offsetting a 0.5 per cent rise in the UK.
Chief financial officer Margherita Della Valle said “the competitive landscape remains challenging in Spain but we are giving continuing improvements in performance”.
The firm hailed a recovery in its commercial performance but warned of a “highly competitive” broadband pricing environment.
Germany was also a problem area for Vodafone, exhibiting no growth as wholesale revenues fell to dent retail growth.
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India Supreme Court ruling causing ‘strain’
Vodafone is still fighting a bitter battle with India’s government after the Supreme Court ordered telcos to pay back around $14bn (£10.9bn) in taxes and penalties last year.
The ruling, which relates to the way spectrum charges are calculated, dragged Vodafone to a €1.9bn loss in its last half-year.
Today Read said Vodafone is awaiting a hearing as soon as this week for its demand from remedies the Indian government.
Without those, the telecoms giant has warned it could pull out of the market.
Read said the ruling has put Vodafone Idea, its Indian arm, under “incredible strain”.
Vodafone’s share price rose 0.7 per cent to 152.36p in early trading.