Vodafone to pay €200m to strip Huawei systems out of ‘core’ network

Move follows new UK and EU guidelines on use of Chinese group’s equipment

Photograph: PA/PA Wire

Photograph: PA/PA Wire

 

Vodafone is to strip Huawei systems out of its core network across Europe at a cost of €200 million after the UK government and European Union issued new guidelines about using the Chinese company’s equipment.

Nick Read, chief executive of Vodafone, said that the company had decided to strip out Huawei from its core - the sensitive centre of a telecoms network where customer information is processed - in light of the new guidance. That process would take five years due to the complexity of removing systems critical to its network.

It had paused investment and upgrades to those core systems, used in Spain and some eastern European countries, last year.

Mr Read said the company’s UK business was already largely compliant with the new British rules with only a small amount of equipment needing to be swapped. BT has said it would cost it £500 million over the next five years to comply with the cap.

Delay

Mr Read did however warn that a Europe-wide move to apply a 35 per cent cap on the amount of Huawei equipment within a telecoms network could delay 5G launches by between two and 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 described as not an “optimal” answer to the question of how to deal with the risk of using the Chinese company’s equipment.

Vodafone said its organic revenue grew 0.8 per cent in the third quarter and reiterated its full-year guidance. Shares gained 2 per cent in early trading.

The company said it has made progress in carving out its tower business, which will be based in Düsseldorf, ahead of a potential float or stake sale in 2021.

Mr Read said that its Indian business, Vodafone Idea, remained in a critical situation due to the retrospective spectrum fees and delays in gaining regulatory approval for a tower merger.

A court hearing over the coming week will determine whether the company can pursue a settlement with the telecoms regulator and potentially whether the business, which has an enormous customer base but is financially weak, will survive. – Copyright The Financial Times Limited 2020