Vodafone halts purchase of Huawei equipment amid Western bans

On Friday, Vodafone became the first major network to suspend the use of Huawei in its core networks. This comes after several major governments have banned Huawei. Vodafone is the largest wireless carrier in the world. Therefore, this new development is a major blow for Huawei. The Chinese company is already facing accusations of evading sanctions against Iran. Vodafone has announced that Huawei gear will no longer be a part of their networks until Western governments make a decision about the company’s potential violation of the law. Nick Read, Vodafone’s chief executive, said:

“We have decided to pause further Huawei in our core whilst we engage with the various agencies and governments and Huawei just to finalise the situation, of which I feel Huawei is really open and working hard.”

Context

The US government has accused Huawei of working with the Communist Party in China to spy on customers and using equipment they bought from the US to make products that they sold in Iran. Even more worrisome is the implication that Huawei also broke UN sanctions by lying about its relationship with a firm that did business with Iran. Trump banned Huawei in the US in August. In late November, the US government started asking its allies to halt business with Huawei as well. The situation became a diplomatic nightmare when Canadian authorities arrested Huawei CFO Meng Wanzhou on behalf of the US. She stayed in custody for several days before her lawyers successfully posted bail. Huawei management as well as the Chinese government registered their anger and protest over the arrest.

Outcome

As Vodafone’s core networks include its data centers, this means that the company is excluding Huawei from its new 5G network. As governments and tech companies scramble to win the race to install 5G infrastructure, Huawei’s chances of making it to the top are growing slimmer. Huawei is one of the three biggest players of the telecom business in Europe and has a 35% share in the market. The other two major companies are Ericsson and Nokia.

Response

Huawei has openly denied any claims of spying. However, scrutiny over whether Huawei is secretly in cahoots with the Chinese government has escalated anyway. After the decision by Vodafone became public, Huawei has also come forward with an official response. A Huawei spokesperson said:

“Vodafone and Huawei are long-term strategic partners that have worked together since 2007. Huawei is focused on supporting Vodafone’s 5G network rollouts, of which the core is a small proportion We are grateful to Vodafone for its support of Huawei and we will endeavour to live up to the trust placed in us.”

The new move by Vodafone will only affect its core networks. The radio access and transmission sectors of Vodafone will continue buying Huawei equipment.

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