Vodafone To Strip Huawei From Its Core Network

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Vodafone

Vodafone is to strip Huawei systems out of the core of its European network at a cost of €200m as the European telecoms sector moves to adapt to new limits on the use of the Chinese company’s equipment.

Chief executive Nick Read said on Wednesday the process would take five years because of the complexity of removing systems critical to its network.

The UK government last week imposed a 35 per cent market share limit on Huawei equipment in the country’s 5G network, while banning it from the “core” — the sensitive heart of a telecoms network where customer information is processed — as well as certain strategic sites.

The EU later made similar recommendations, although member states retain responsibility for their own security decisions.

Vodafone’s move comes as European telecoms groups redraw their plans because of mounting security fears over Huawei’s grip on communications networks in western markets.

During the 3G and 4G eras, many companies in the sector used the Chinese company’s equipment both in the core of their networks and the “non-core” — radio equipment on masts and rooftops.

Vodafone last year paused investment and upgrades to the core systems, used in Spain and some eastern European countries, and will now remove them, while BT is stripping Huawei equipment from the core of EE’s 4G network, which it expects to complete by the end of this year.

Mr Read said Vodafone’s UK business was already largely compliant with the new British rules, with only a small amount of equipment needing to be swapped.

Vodafone has historically used Huawei in large parts of its non-core network outside London. It shares its network with O2, however, and Huawei’s share of the combined network is already near the 35 per cent mark.

BT said last week the rules would cost it £500m over the next five years.

Mr Read warned that any Europe-wide move to apply a 35 per cent cap on the use of Huawei equipment could delay 5G launches by two to five years and increase prices for customers.

“I wouldn’t want this for Europe, it would be highly disruptive,” he said of the cap, which he criticised as not being an “optimal” solution to the question of how to deal with the risk of using the Chinese company’s equipment.

Vodafone reported organic revenue growth of 0.8 per cent in the third quarter and reiterated its full-year guidance. It said it had added 400,000 broadband customers, and analysts said there were signs of commercial momentum in key markets and improvements in markets such as Spain, where it has struggled.

The company also said it had made progress in carving out its towers business, which will be based in Düsseldorf, ahead of a potential float or stake sale in 2021, signing a new network-sharing deal with Portuguese rival NOS during the quarter.

Vodafone shares were down more 1.2 per cent at midday in London.

Mr Read said its Indian joint venture, Vodafone Idea, remained in a critical situation as a result of multibillion-dollar retrospective spectrum fees and delays in gaining regulatory approval for a tower merger.

A court hearing in the coming week will determine whether the company, which has warned it is at risk of collapse, can pursue a settlement with India’s telecoms regulator.

source: Financial Times

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