Telia Norway will build a 5G radio network using Sweden's Ericsson as its sole supplier despite mounting concern about so-called "single vendor" contracts and reports that government authorities did not seek to block China's Huawei, which currently supplies 4G products to the Norwegian telco.
That all suggests Ericsson offered extremely competitive terms to secure business with Telia Norway. The deal comes several months after Ericsson warned that efforts to land "strategic contracts" and boost its market share were eroding profit margins.
Jenny Lindqvist, the head of Ericsson's business in northern and central Europe, declined to comment on the exact commercial arrangements but said Ericsson had been "competitive" during a tender and made a commitment to support a nationwide 5G rollout by 2023 -- a more aggressive timetable than many other European telcos are considering.
Ericsson's attractions aside, Telia Norway will be entirely dependent on the Swedish vendor for its 5G radio access network (RAN). The risks inherent in such an approach were highlighted last year when US sanctions against ZTE caused disruption for operators that had single-vendor contracts with the Chinese vendor.
Italy's Wind Tre blamed customer losses on delays to a network project after ZTE was unable to procure components from US suppliers. The Italian operator subsequently introduced Ericsson as a second vendor.
Ericsson is on safer ground, although it expects to be fined around $1 billion by US authorities for paying bribes in several markets under previous management. Investigations into its behavior by non-US authorities could follow, it has acknowledged.
Telia did not respond to questions about its use of Ericsson as a sole 5G vendor in Norway.
Ericsson executives will see the latest deal as another victory over close rivals Huawei and Nokia in the nascent 5G market. The development marks a bigger setback for Huawei, which currently supplies 4G equipment to Telia Norway but has missed out on 5G business and will eventually play no part in Telia's Norwegian RAN.
Lindqvist confirmed to Light Reading that Ericsson would be phasing out other vendor equipment as part of its new deal. "Up until 2023 [that] will be changed out so there is a full Ericsson network on the radio side," she said.
Asked about Telia's decision to replace Huawei, a spokesperson for the Chinese vendor said: "We have been informed about Telia's decision, which of course we fully respect. We will continue to work hard on the other engagements we have with Telia and we remain totally committed to fulfilling our customers' expectations."
Nokia has not previously been a RAN supplier to Telia in the Norwegian market, said a spokesperson for the Finnish firm.
News of Telia's 5G deal with Ericsson follows recent reports that Norwegian regulators would not try to restrict Huawei's activities in the country's 5G market. Along with other European governments, Norway is likely to have come under pressure from the US administration to ban Huawei on grounds of national security. US hawks say the Chinese vendor's 5G products could facilitate spying by the Chinese government.
Ericsson does not plan to commence rollout until next year, when Telia is expected to launch its first commercial 5G services. Lindqvist declined to comment on the timetable when asked why rollout will not start this year.
The modernization of the entire radio network will take advantage of a new technology that allows spectrum to be shared between 4G and 5G services, said Ericsson.
Although Telia is using Ericsson in its RAN, it appears to have gone elsewhere for some of the technology used in the "core," the intelligent part of the system. Last year, Nokia said it would be the sole vendor of a "cloud-native" packet core covering Telia's operations in Denmark, Estonia, Finland, Lithuania, Norway and Sweden. In Norway, Ericsson is also involved on the core network side, said Lindqvist, without providing further details.
Ericsson now claims to support 19 "live" 5G networks in 15 countries.
- 5G Momentum Props Up Ericsson's Q2
- ZTE ban and Iliad entry blow Wind Tre of course
- Ericsson Expects $1B US Fine for Corruption, Warns Non-US Investigations May Follow
- For Trump's Attack Dogs, There's No Stopping Huawei
- The Eye-Watering Cost of Multivendor Networks
— Iain Morris, International Editor, Light Reading