Huawei Ban in Australia Threatens 1,500 Jobs, Warns Chinese Vendor

China's Huawei has delivered a stark warning that about 1,500 Australian jobs are at risk unless the country's government reverses a ban that prevents it from selling 5G products to Australian operators.

The vulnerable jobs are apparently spread across about 50 local contractors that have seen annual payments from Huawei fall since August 2018, when authorities banned the controversial equipment giant from operating in the 5G market.

Australia's government has sided with the US in arguing that Huawei and ZTE, a smaller Chinese vendor, are a potential security threat because of the links between Chinese companies and the Chinese state. The ostensible concern is that Chinese network products may include "backdoors" or malware used by China's military.

Huawei claims to have spent about A$1 billion ($680 million) on local contractors to build networks for operators that have relied on its older 2G, 3G and 4G products. This work will come to a gradual end in the next two years, said the company in a statement, unless circumstances change.

Payments to local contractors have fallen by "tens of millions of dollars" this year, it said, and an even sharper drop is expected next year.

"Our suppliers are overwhelmingly small to medium-sized businesses employing around 30 people and in many cases Huawei is currently delivering around 80% of their annual revenues -- so without us they are in huge trouble," said Jeremy Mitchell, Huawei Australia's director of corporate and public affairs.

"Once you factor in the sub-contractors that are employed by our principal suppliers we are currently responsible for around 1,500 jobs in the local telecom construction industry -- but the cold reality is that unless the 5G ban on Huawei is reversed those jobs will be lost over the next 18 months," he added.

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Mitchell says 5G deployment is proceeding at "glacial pace" in Australia because there is no competition to spur rollout.

Telstra, Australia's largest mobile operator, is building a 5G network with Sweden's Ericsson and said in August it had deployed 320 5G basestations in ten cities and would aim to boost coverage "fivefold" in the following year.

Number-two player Optus, which also uses Ericsson, has focused on using 5G to support residential broadband services and said earlier this month that around 300 5G sites had been deployed. Its target is to equip 1,200 with the technology by March 2020.

But cable operator TPG scrapped its 5G project after Huawei was banned, arguing that no other supplier would do. Vodafone's 5G plans have also been thrown into doubt by a regulatory decision to block the company's proposed merger with TPG on competition grounds.

The outlook is especially bleak for Australian contractors, says Huawei, because work on the construction of a national broadband network is due for completion in June next year.

At least one contractor has expressed concern about the current situation. "Huawei is a major customer of ours and we share a very respectful working relationship, so the 5G ban is obviously very bad news for our business," said Craig Newton, the director of operations at Brisbane-based Rockford Services, in Huawei's statement.

Rockford Services has a relationship with Huawei that dates back four years and has carried out work for the Chinese vendor in New South Wales and South Australia.

"We now have to go out and try to find new customers, not an easy task in the current environment because the NBN rollout is coming to a close and we are not seeing 5G being deployed with any great urgency by the operators," said Newton.

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— Iain Morris, International Editor, Light Reading

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