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Eurobites: Vodafone Presses 'Pause' Button on Huawei Gear

Paul Rainford
1/25/2019

Also in today's EMEA regional roundup: Q3 revenue down at Vodafone; Poland set to ban Huawei from 5G networks; Open Fiber turns to Nokia for Italian job.

  • Vodafone Group plc (NYSE: VOD) has decided to "pause" the deployment of Huawei equipment in some of its core networks while the security-related investigations being carried out by a host of Western governments into the Chinese vendor's operations continue, Reuters reports. Spain is one of the markets affected by Vodafone's decision. In recent months Huawei Technologies Co. Ltd has been hit by allegations that its perceived links to the Chinese government make its equipment effectively a trojan horse for "spyware." (See Where Huawei Fears to Tread.)

  • The announcement regarding Huawei came during Vodafone's reporting of its third-quarter figures, which, as City AM reports, presented a not altogether encouraging picture for the mobile giant. Revenue was down by €0.8 billion (US$0.9 billion) on the previous year, to €11 billion ($12.4 billion), a decline Vodafone attributed to a combination of new accountancy measures, foreign exchange fluctuations and the sale of its Qatari business in 2018. Within Europe, organic service revenue fell by 1.1% year-on-year, though in a statement the operator claimed to have seen "improving customer and financial trends in Italy, robust retail growth in Germany, reduced churn in Spain and a consistent performance in the UK." On the back of these results, Vodafone reiterated its full-year guidance. This week Vodafone announced its intention to extend its existing network-sharing agreement with Telefonica in the UK to include 5G, which it hopes will enable it to offer 5G services over a wider geographic area at a lower cost. (See Vodafone Reports Fiscal Q3 Dip in Revenues and Vodafone, O2 Hint at UK Towers Sale in 5G Update.)

  • Vodafone's not the only one getting twitchy about Huawei, of course. It seems the latest country set to ban the Chinese vendor from playing a part in future 5G network rollouts is Poland. According to a Reuters report, the arrest of a Huawei employee on suspicion of spying in Poland makes it a racing certainty that Huawei will be frozen out of that country's 5G action.

    Here's a handy update (courtesy of Iain Morris) on where Huawei's either under scrutiny or just plain not welcome:

    Table 1: Huawei Heebie-Jeebies: Where We're At

    Status Country Details Known Huawei customers Other major telcos affected by restrictions
    Govt restrictions USA US House of Representatives warned major service providers off using Chinese vendors in 2012, arguing "the risks associated with Huawei's and ZTE's provision of equipment to US critical infrastructure could undermine core US national-security interests." US temporarily banned component sales to ZTE earlier this year None among Tier 1 telcos, but Sprint acquired Huawei gear with its Clearwire takeover and still had this in its network in 2016, as revealed by Light Reading AT&T, T-Mobile US, Verizon
    Govt restrictions Australia Both Huawei and ZTE are barred from the 5G market and cannot sell products to NBN Co, Australia's national wholesale network Vodafone Hutchison Australia Telstra, Optus
    Govt restrictions New Zealand The government has warned Spark off using Huawei's 5G equipment and by implication would not tolerate 5G deals between Chinese equipment vendors and other telcos Spark Vodafone New Zealand, 2degrees
    Govt and operator restrictions Japan Starting in April 2019, Japan's government will ban its ministries and defense forces from buying and deploying IT and telecoms equipment from Chinese companies, citing cybersecurity concerns; SoftBank is reportedly replacing Huawei as a 4G supplier SoftBank NTT DoCoMo, KDDI, Rakuten
    Govt warning; operator restrictions UK Security watchdogs have this year flagged vulnerabilities in Huawei's equipment; telecom incumbent BT is stripping Huawei out of its mobile core and optical networks and says it will not buy any of Huawei's mobile edge computing products BT, Three UK O2, Vodafone UK
    Govt restrictions Taiwan Ban on equipment developed by either Huawei or ZTE has been in place for the last five years and was recently renewed, according to press reports None Chunghwa Telecom, Taiwan Mobile, Far EasTone and Taiwan Star
    Operator restrictions France Orange tells Bloomberg it will not use Huawei as a 5G kit supplier; Orange subsequently confirms to Light Reading that comments were made "in the context of France" Altice, Bouygues Telecom Orange, Iliad
    Operator restrictions Spain Vodafone CEO Nick Read says he will "pause" the rollout of Huawei products in core networks, deemed to be the most sensitive part of the infrastructure, amid government security concerns. Vodafone, he said, uses Huawei's core equipment in Spain and some smaller European markets MásMóvil, Orange, Telefónica, Vodafone
    Govt warning Poland Poland is poised to exclude Huawei from its 5G market, according to a Reuters report citing government sources, after its recent arrest of a Huawei employee on charges of spying Orange, Play, Polkomtel, T-Mobile

  • …All of which could, of course, be good news for Ericsson AB (Nasdaq: ERIC), which has just recorded its first year of organic sales growth since 2013, with sales rising 3% to 210.8 billion Swedish kronor ($23.2 billion). (See Ericsson Hails First Annual Sales Growth Since 2013 as 5G Comes Calling.)

  • Italian FTTH wholesaler Open Fiber SpA has assigned Nokia a GPON-related role in its fiber rollout project that is intended to bring gigabit broadband services to the small towns and rural areas of Italy. Nokia Corp. (NYSE: NOK) has been selected as the sole supplier for two of the four "clusters" set out by the Italian government.

  • América Móvil S.A. de C.V. , the Mexican operator owned by famed moneybags Carlos Slim, has bought all of Telefónica 's Guatemalan unit and 99.3% of its El Salvador operation for a combined price of $648 million, Bloomberg reports. Telefonica has previously blamed the decisions of regulators for its failure to thrive in Mexico.

  • BT Group plc (NYSE: BT; London: BTA) says it's the first international telco to have been awarded nationwide "value added" licenses from China's Ministry of Industry and Information Technology. The licenses enable BT to contract directly with its customers in China and bill them in local currency. But, considering the current febrile atmosphere surrounding the relationship between Chinese telecom companies and the West, you can't help but wonder: How long will it be until these licenses are revoked?

  • 1&1 Drillisch, the mobile virtual network operator (MVNO) owned by United Internet AG , plans to apply to take part in Germany's forthcoming 5G auction, Reuters reports. If successful, it would become Germany's fourth non-virtual mobile operator.

  • VEON , the emerging markets operator headquartered in Amsterdam, has appointed Sergey Afonin CEO of Beeline Uzbkekistan. Afonin, who joined the VEON Group in 2016, replaces Dmitriy Shukov, following his decision to step down after three years in the role.

  • And finally, a Eurobites scoop. An ice-cream scoop, that is (sorry, but it is Friday and it's been a long week): Telenor Connexion has teamed up with refrigerated unit manufacturer ISA to create "smart gelato display cabinets" which are being showcased this week at the Sigep show in Italy. The units, apparently, are "built with computer vision and AI capabilities to help retailers assure their gelato is always displayed perfectly." If the gelato (that's the upmarket Italian version of bog-standard ice cream, to the uninitiated) isn't up to snuff, an alert is sent back to a boiler-suited operative at the gelato nerve center so that appropriate changes to the recipe can be made. As IoT "use cases" go, it'll take some licking.

    — Paul Rainford, Assistant Editor, Europe, Light Reading

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