The UK’s partial Huawei ban will cost Vodafone €200 million – is it worth it?

By Fiona Leake
published

Vodafone will remove Huawei equipment installed in critical areas, and the cost is going to be significant.

Vodafone CEO Nick Read has been open about the cost of limiting Huawei's involvement in the UK's 5G infrastructure.
Vodafone CEO Nick Read has been open about the cost of limiting Huawei's involvement in the UK's 5G infrastructure. (Image credit: Vodafone)

After the government imposed a 35 percent cap on all Huawei equipment used in UK 5G networks, huge changes are having to take place. Vodafone CEO Nick Read revealed that huge removals are having to take place which doesn’t bode well for the future of 5G in Europe. 

The move of Huawei equipment could take up to five years and cost a hefty €200 million. This could seriously put UK networks behind other countries as the delay will cost both time and money. 

“We have now decided as a result of the EU toolbox and the UK government’s decision to take out Huawei from the core,” Chief Executive Nick Read told reporters recently. “This will take around five years to implement at a cost of approximately 200 million euros,” he said.

Whilst Huawei remains the world’s leading 5G technology supplier, the company’s close relation to the Chinese government, and bans placed on it due to the US, has made many countries either ban or limit Huawei’s access to their networks.  

Vodafone faces losses 

The UK government may have allowed Huawei access to the UK’s 5G networks but it has placed a considerable 35 percent limit, with the aim to prevent Huawei gaining access to critical infrastructure. This makes sense politically, but will damage telcos like Vodafone financially. 

Vodafone has already reported losses of €7.6 billion for the fiscal year, ending in March 2019. The telco hoped that the joint venture with Huawei would speed up European adoption of 5G, and put pressure on the US and China. However, this will no longer be a viable option for Vodafone. 

 The UK was stuck between a rock and a hard place when it came to Huawei: it could ban it entirely from UK networks, and fall far behind with 5G; or, it could allow the company’s technology to be used for 5G, and face damaging its close relationship with the US. Boris Johnson decided to go halfway, erring on the side of caution with the 35 percent limit. And it’s a move that doesn’t appear to have won backing from either side.

Fiona Leake
Fiona Leake

Fiona discovered her love for investing and making money from a young age. Since then this interest has grown and now she loves writing about investing and business, and follows the 5G market closely. She is also a technology enthusiast, and so they tend to be her favourite investments.