Huawei faces fresh challenges in Europe after Germany’s Deutsche Telekom announced it would review its vendor strategy and French Orange SA said it would not work with the Chinese firm to build its 5G network in France.
The shift countries around the world follows Huawei’s exclusion on national security grounds by some U.S. allies from building their fifth-generation (5G) mobile networks. U.S. officials claim that Huawei's network equipment may contain “back doors” that could open them up to cyber espionage.
Deutsche Telekom, Europe’s largest telecoms company, said it was reviewing its vendor plans in Germany and the other European markets where it operates, given the debate on the security of Chinese network gear.
“Deutsche Telekom takes the global discussion about the security of network equipment from Chinese vendors very seriously,” the company said.
Previously, German officials have said they see no legal basis to exclude any vendors from the buildout of fifth-generation networks.
But Deutsche Telekom's stance comes as U.S. regulators are examining the proposed $26 billion takeover by its T-Mobile US unit of Sprint Corp, which is controlled by Japan’s Softbank. Nearly half of the German company’s revenues come from its U.S. unit T-Mobile.
Softbank, which is days away from listing its wireless unit in Tokyo, plans to replace its 4G network equipment from Huawei, Nikkei has reported.
“We don’t foresee calling on Huawei for 5G,” Orange CEO Stephane Richard told reporters in Paris. “We are working with our traditional partners - they are Ericsson and Nokia.” He added that the security concerns were legitimate: “I absolutely understand that all of our countries, and the French authorities, are preoccupied. We are too.”
Huawei says the security concerns are unfounded. Tensions have been heightened by the arrest of Huawei’s chief financial officer in Canada for possible extradition to the United States.
Huawei said it was not a supplier to Orange’s existing 4G network in France and would not feature in the company’s 5G plans in France. Huawei does supply Orange’s networks outside France and expects to be involved in 5G there, it said.
BT Group Plc in the U.K. ha salso pledged to rip out some of the Huawei’s equipment.
On Friday, the Norwegian government said it’s weighing concerns with using suppliers from countries with which there’s no security policy cooperation -- an oblique reference to China.
Dropping Huawei in Europe wouldn’t be easy. Most carriers have ordered its equipment because the technology is often seen as superior to that of its rivals. In any case, excluding the Chinese companies from the 5G infrastructure market would limit the numbe of vendors, possibly driving the 5G costs higher.