Deutsche Telekom and Orange to exclude Huawei from building their 5G networks

Huawei equipment has a price advantage: sourcing from non-Chinese sources is likely to drive up costs. Security comes at a price.

In a significant development, China’s Huawei is facing fresh headwinds in Europe following an announcement by Deutsche Telekom that it would review its vendor strategy; Orange has also stated it would not use its equipment to build its 5G network in France.

These developments mirrors the stance taken by the United States, Australia, New Zealand, and Japan on national security grounds that Huawei’s equipment may contain “back doors” for Chinese intelligence which opens up the possibility of cyber espionage.

In Japan, Softbank plans on replacing its exiting 4G network equipment from Huawei with those of its peers.

Huawei has stated the security concerns are unfounded.

Regardless of Huawei’s denials, Orange CEO Stephane Richard stated, “We don’t foresee calling on Huawei for 5G. We are working with our traditional partners – they are Ericsson and Nokia.”

Saying the security concerns are legitimate, Richard said, “I absolutely understand that all of our countries, and the French authorities, are preoccupied. We are too.”

Huawei stated 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. However, it does supply Orange’s networks outside France and expects to be involved in 5G there.

Mirroring the stance of Orange, Germany’s biggest mobile operator stated, “Deutsche Telekom takes the global discussion about the security of network equipment from Chinese vendors very seriously”.

Deutsche Telekom’s stance assumes significance since German officials have previously stated they see no legal basis to exclude any vendors, including Huawei, from buildout 5G networks.

Germany’s Economy Minister Peter Altmaier made it lucidly clear that Germany will not compromise on security.

“There are no concerns about individual companies,” said Altmaier, “But each product, each device must be secure if it is going to be used in Germany.”

Incidentally, other German telecoms players have said, they are continuing talks with Huawei as they draw up proposals to take part in Germany’s auction of 5G licenses in early 2019.

“We are watching the discussion very closely, but we will not participate in the current speculation,” said Telefonica Deutschland, Germany’s No.3 operator that has existing relationships with Huawei and ZTE.

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