October 5, 2021
Huawei is the Voldemort of telecom for Europe's operators, the supplier that shall not be named.
"The Chinese vendor" was how Orange's Mari-Noëlle Jégo-Laveissière initially referred to a company now banned from parts of the European telecom sector. But as she warmed to the task of answering a question about Huawei, the head of Orange Europe grew less restrained – as if to remind everyone that Huawei still figures prominently in Orange's footprint.
What's clear is that Orange is taking its lead from authorities on whether to replace a vendor deemed a security risk by the US government.
"There is no absolute rule in the group of saying we are not going to work with Huawei anymore," said Jégo-Laveissière at a press conference in London earlier today.
"We are cautious in Europe to follow the rules of different countries – it is explicit in some countries but absolutely not in others, which allows us to keep a balance."
Figure 1: Orange Europe boss Mari-Noëlle Jégo-Laveissière is sticking with Huawei where possible.
Those rules mean using other suppliers in France, which last year indicated that licenses for Huawei kit will not be renewed when they expire in the next few years.
Orange, in any case, had previously relied on Ericsson and Nokia as 4G suppliers in its domestic market. It has now signed deals with both the Nordic companies for 5G radio access network (RAN) products.
Elsewhere, Orange's reliance on Huawei as a RAN vendor has looked heavy.
In Spain, its second-largest market by sales, around 60% of its 4G network came from Huawei last year, according to data compiled by Strand Consult, a Danish advisory firm. In Poland, Orange's number-three market, Huawei provided 70% of the 4G RAN in 2020, while in Romania it was Orange's sole 4G RAN vendor.
A desire to retain Huawei is largely about pricing, said Jégo-Laveissière. She plans to continue relying on a joint procurement partnership with Germany's Deutsche Telekom (DT) to exert pressure on other suppliers and obtain favorable terms.
"We do RFPs [requests for proposal] on a global scale with the footprint of Orange and DT, which allows us to have the price we want or use Ericsson or Nokia," she said.
"This way of working allows us to have the right price even if Huawei is not in the game in some countries."
Orange is unlikely to be happy about government orders to replace Huawei as a 5G kit vendor. Stripping it out out of networks in Spain, Poland and Romania could be a costly process that holds up 5G rollout for Orange.
The trouble is largely that Orange would also have to replace Huawei's 4G equipment with products supplied by the new 5G supplier. Not doing that would risk interoperability problems.
US authorities have previously leaned on European countries to exclude Huawei, arguing that its Chinese identity makes it a security threat. Their apparent concern is that China's government could use malware installed in Huawei products to snoop on other countries or even bring down their telecom networks.
"The main concern is not about spying," said Michael Trabbia, now Orange's chief technology officer, during an earlier conversation with Light Reading when he was head of Orange's Belgian subsidiary. "The fear is their ability to stop or block the network."
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Belgium is a rare example of a European country where Orange has announced plans to replace Huawei, previously the only RAN supplier for the network shared with incumbent operator Proximus.
In October last year, Orange said it would switch to Nokia when building its 5G network and for a swap-out of the 2G, 3G and 4G systems. The update came several months after reports surfaced that Belgium would impose restrictions on "high-risk" vendors, Europe's standard designation for Chinese companies.
Besides leaning on European governments, the US has also imposed sanctions on Huawei that have cut it off from critical suppliers including TSMC, a Taiwanese chipmaker. Huawei executives recently warned the industry that device revenues would fall by $30 billion to $40 billion this year, from $50 billion in 2020, because of those sanctions.
Major deals with Chinese operators have propped up Huawei's networks business, but that also looks vulnerable to the blockade on components and appears to have relied on stockpiles to continue serving customers.
While European Union rules are ambiguous about Huawei's role in the RAN, they have expressed more concern about its involvement in the 5G core, typically seen as the brain of the system. That is one part of Orange's network where Huawei can probably count itself as unwelcome as Voldemort in future.
"In each country, the core will probably not be Huawei," said Jégo-Laveissière.
— Iain Morris, International Editor, Light Reading
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