Vodafone warns Huawei rip-out would cost UK 5G lead

Vodafone has warned that the UK’s hopes of leading the world in 5G technology would be dealt a terminal blow if the government removes Huawei from the country’s telecoms infrastructure.

Boris Johnson is facing mounting pressure from Washington and from within his own government to exclude Huawei, even though the company’s equipment in the UK is central to delivering 5G, new mobile technology that delivers vast amounts of data over wireless networks at fast speeds.

The prospect of a full ban on Huawei equipment has increased since last month, when a branch of GCHQ, the signals intelligence agency, launched an emergency review on the back of new US sanctions aimed at the Chinese company.

However, Scott Petty, chief technology officer of Vodafone UK, told the Financial Times: “The UK’s leadership in 5G will be lost if mobile operators are forced to spend time and money replacing existing equipment.”

A full ban could require Britain’s telecoms companies to rip out and replace billions of pounds worth of existing equipment.

5G wireless networks can deliver speeds equivalent to fixed-line broadband and will support growing consumer demand for huge amounts of data. The UK government has identified it as a key part of its industrial strategy for sectors including logistics and car making.

Vodafone’s warning comes as rebel Conservative MPs and the US authorities put pressure on Mr Johnson to reverse a January decision to allow limited use of Huawei equipment in networks.

The prime minister set a 35 per cent cap on Huawei products, excluding them from core systems. But some Huawei critics have called for the UK to adopt a full ban on its equipment as soon as 2023, when the cap is due to come into effect.

Mr Johnson is looking to reduce Britain’s broader reliance on China for critical products, including sensitive technology and medical products, under a review into the country’s supply chains called “Project Defend”.

Mr Petty said that, rather than stripping out Huawei equipment, “efforts should instead be focused on expanding 5G coverage, developing 5G capabilities for UK industry, and investing in the next stage of this important technology”.

British telecoms companies have been among the first in the world to launch early variants of 5G. BT, Vodafone and Three have all launched 5G using Huawei kit and have continued to upgrade their networks with the Chinese group’s technology in recent weeks following Mr Johnson’s decision to permit it.

Existing commercial contracts with Huawei mean the industry is tied into those agreements unless government policy changes, according to people within the sector.

BT, which owns the EE network, has already said it would cost the company £500m to comply with the government’s 35 per cent cap on Huawei equipment.

The UK is second only to Switzerland in the early roll out of 5G networks in Europe, according to research company Omdia. The world leaders in 5G deployment are the US and South Korea.

Few in the telecoms industry want to speak publicly about Huawei. But there is a growing sense of resignation that the UK government is moving towards phasing out the Chinese company’s equipment over the coming years.

In a sign of its hardening position, the government said last week it would work with its “five eyes” security partners — US, Canada, New Zealand and Australia — to develop alternatives to Huawei. That could include turning to existing competitors such as Ericsson, Nokia, Samsung and NEC, or a host of small US and European companies looking to gain scale.

Mr Petty said Vodafone is already working with Ericsson and testing equipment from new suppliers. “We are not tied to one supplier, but it is important to understand the extent of what is at stake here,” he said. 

Huawei launched a charm offensive in the UK this week, saying it was owned by its employees “similar to the John Lewis model” and urging the government not to overestimate security risks.

That followed comments by Tom Cotton, an influential Republican senator, who told British MPs at a hearing last week that allowing Huawei to supply equipment for 5G networks was akin to allowing the Soviet Union to build Britain’s submarines and tanks during the cold war.

Additional reporting by George Parker

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