Daily Management Review

Chinese Firms Huawei And ZTE Banned From Upcoming 5G Networks By Sweden


The use of telecom equipment from China's Huawei and ZTE for development of the 5G network was banned by Sweden on Tuesday on security grounds. The country is slated to soon auction spectrums for 5G networks.
Sweden no joins other European countries that have already banned or restricted the use of telecom equipment from the Chinese companies.
After assessments by the Swedish Armed Forces and security service, which called China "one of the biggest threats against Sweden", the setting of the licence conditions were finalised, said the Swedish Post and Telecom Authority (PTS).
After sustained diplomatic pressure from the United States, which alleged that the telecom equipment supplied by Huawei could be used by Chinese agencies for spying, controls on Chinese companies that are building 5G networks have been tightened by various European governments.
Allegations of its equipment being a security risk for countries have been repeatedly denied by Huawei.
The first country to restrict and ban the use of telecom equipment from Huawei was the United Kingdom which in July ordered all equipment of Huawei to be completely removed from the country’s 5G network by 2027.
There were no comments available from Huawei and ZTE.
Ericsson, one of Europe's leading telecoms equipment suppliers, is a Sweden based company.
“The ban leaves network operators with less options and risks slowing the rollout of 5G in markets where competition is reduced,” said Ben Wood, chief of research at CCS Insight.
Contracts from all three major operators in China to supply radio equipment for 5G networks have been won by Ericsson, unlike Nokia. However there is now a concern that those contracts could be at risk if there is retaliation from the Chinese government.
“It could be that some of the European vendors will sell less in China going forward if the Chinese are selling less in Europe going forward,” CEO Kjell Johnsen of Swedish-based telecom operator Tele2 said in a post-earnings conference call.
Ericsson and Finland's Nokia are the two companies that are to benefit most from the Swedish ban.
European governments should only use telecom equipment manufactured by the Scandinavian companies, Keith Krach, the U.S. undersecretary of state for economic affairs, had earlier said.
No comment on the issue was available from Ericsson and Nokia.
Equipment from Huawei and ZTEfrom their existing central functions needs to be removed first by January 1 2025 by all companies that taking part in the spectrum auction, PTS said.
Equipment used to build the radio access, transmission and core networks in addition to the service and maintenance of the network were defined to be the central functions, according to the regulator.
The conditions for license granting were designed to address the assessments that were made earlier by the armed forces and security service, PTS said.
“Many operators have already proven that when they rip and replace Chinese equipment, it doesn’t have a negative impact on their capital spending,” said industry consultant John Strand.